EU watchdogs to confer over extensions to short-selling bans

PARIS (Reuters) - European Union countries that introduced temporary bans on short-selling of shares will together decide this week whether they should lapse or be extended, French markets regulator AMF said on Thursday.

The bans were introduced by Italy, Greece, France, Belgium, Austria and Spain after extreme market volatility in March as investors sought to price in an expected recession triggered by national lockdowns implemented in an effort to halt the coronavirus pandemic.

Italy’s ban lasts until June 18, but others are due to lapse on Friday against a backdrop of lower volatility in markets.

Short-selling involves a trading order that bets on falling share prices, which the regulators said could exacerbate the broad sell-offs that have hit markets worldwide.

Europe failed to agree a common stance on the matter, with Britain and Germany declining to introduce their own bans, as did the United States.

“Our decision will be taken depending on market behavior until the end of the week and in consultation with other countries that put these restrictions in place,” said AMF Chair Robert Ophele.

The AMF head said that a short-selling ban, which in France runs until May 18, is an exceptional measure that is not intended to last.

“Its abandonment would in this case be excellent news, as it would reflect a certain normalisation of the market,” Ophele told French lawmakers.

Stephane Boujnah, chief executive of pan-European exchange Euronext ENX.PA, on Wednesday said that it was clear in March that markets were highly volatile and a short-selling ban was one of the measures that could calm the situation.

Reporting Maya Nikolaeva in Paris; Additional reporting by Huw Jones in London; Editing by David Goodman