As has been widely reported, various European regulators have recently enacted temporary bans on short selling financial stocks in response to the market volatility of the past few weeks. Countries that have taken such steps include France, Italy and Spain. Meanwhile, it has been reported that Germany's Minister of Economics and Technology, Philipp Roesler has called for a similar short-selling ban across G-7 countries.
Whether such temporary bans will have the effect of calming markets remains to be seen. As we discussed in February 2009, an IIROC study that reviewed the impact of the Canadian restrictions on short sales in 2008 found that there appeared to be "no appreciable effect" on the price of the applicable securities.
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