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Austria extends ban on naked short-selling

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The Austrian financial market watchdog, the FMA, said Tuesday it had decided to extend a current temporary ban on so-called naked short-selling by a further six months.

“The Austrian Financial Market Authority has extended its temporary prohibition on naked short selling in the cash market” of shares of the banks, Erste Group and Raiffeisen International, and insurers UNIQA and the Vienna Insurance Group, the FMA said in a statement.

The temporary ban, in force since October 2008 and which had been due to run out at the end of May, has been extended until November 30, 2010, the statement said. Naked short selling occurs when an investor sells a security he does not own and has not even borrowed, hoping to be able to buy it later in the day at a lower price, thereby earning a profit. Germany recently introduced a similar ban in a bid to ease the market volatility it says threatens the eurozone economies.

Vienna, May 25, 2010 (AFP)