Restrictions maintained on short-selling of financial stocks to 31 January 2010
The Federal Financial Supervisory Authority (BaFin) extended its ban on certain short-selling transactions to 31 January 2010.
By its Decrees dated 19 and 21 September, BaFin had prohibited naked short selling (uncovered short selling transactions) in shares of eleven financial companies. In December 2008, BaFin extended until 31 March 2009 and then until 31 May 2009 the ban, which had been set to expire at the end of 2008.
Naked short selling exists when the seller sells shares which he does not own or for which he does not have a plea-proof claim to transfer of title in shares of the same class at the time of the transaction. By influencing the prices of the stocks specified, transactions resulting in a short position or in the increase of a short position (referred to as short selling transactions) in shares within the meaning of no. 1 of the Decree dated 19 September 2008 would, by reason of the importance of the companies for the aggregate economy, reinforce this development and would therefore result in further excessive price movements which might jeopardise the stability of the financial system and thus entail serious disadvantages for the financial market as a whole.