ESMA suspends short selling in Greece, again!

2 September,, Lagos – The European Securities and Markets Authority (ESMA) in collaboration with the Hellenic Capital Market Commission (HCMC) have again reached an agreement on the emergency suspension of short selling for a period of 30 calendar days, as proposed by the HCMC.

This situation arises as a necessity, due to several factors which have inhibited the smooth operations of the Greek capital market, as well as protection of investors and the preservation of financial stability, despite the reopening of the Athens Exchange and the MTF of EN.A on August 3, 2015.

This follows from a similar ban imposed back in June. The sophistication of financial markets in this age is such that profit can be made both in good and bad situations, such is the present dillema of short selling in Greece. In the heat of the Greek crisis, the European Securities and Markets Authority (ESMA) considered that adverse developments which constitute a serious threat to market confidence in the Greek financial  market have arisen. This prompted the body to take adequate steps in safeguarding financial market operation, which could potentially lead to a worsening situation with the country’s finances. This steps have been taken in conjunction with the Hellenic Republic Capital Market Commission (HCMC).

According to the ESMA, the renewed ban affects transactions in any financial instrument that creates, or increases, a net short position on any of the shares admitted to trading on the Athens Exchange and the Multilateral Trading Facility of “EN.A” (Alternative Market of the Athens Exchange) of which the relevant Competent Authority is HCMC

Some of the factors which have prompted the renewal of the suspension of short selling include:

  • The imposition of capital controls and the restrictions of transfers in the acquisition of financial instruments (i.e. restrictions on the buy side) for Greek investors based on Article 5 of Law. 3606/2007 (A 195) through regulated markets and multilateral trading facilities or professionals who have such financial instruments as UCITS;
  • the political developments namely the forthcoming parliamentary elections that will take place on the 20th of September 2015;
  • the forthcoming recapitalisation of the four Greek “systemic” credit institutions.

The suspension is expected to hold till 24:00:00 (CET) on September 30, 2015.

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