Greek regulator the Hellenic Capital Market Commission (HCMC) has lifted its ban on the short selling of shares listed on the Athens Exchange, imposed on 28 April 2010. But the ban on naked short selling has not been lifted.
The HCMC has also introduced the condition, as of 1 September 2010, that short sellers must ensure that they have adequate shares prior to the T+3 settlement date to fulfil their obligations.
The regime is similar to that instigated by the Polish regulator Komisja Nadzoru Finansowego on 19 July 2010.
The ban was enacted during a period of turmoil for Greece which, having borrowed heavily during the financial crisis, subsequently had to be bailed out in May 2010 by the International Monetary Fund and members of the European Union. It was followed on 19 May 2010 by a German ban on short selling certain financial stocks, bonds and credit default swap transactions.
France and Austria had extended existing bans on the short selling of selected financial stocks in January and February of 2010 respectively.
Short shelling has been a concern for politicians and regulators, who fear it could accelerate the declining value of assets in times of market volatility.
On 2 March 2010, the Committee of European Securities Regulators (CESR) announced a consultation into creating a regime for the disclosure of short selling positions. “The regime would help to identify and restrain potentially abusive behaviour at an early stage and allow regulators to take timely preventive measures,” said Anastassios Gabrielides, chairman of the Capital Market Commission of Greece and chair of CESR-Pol, a sub-group of CESR responsible for surveillance and exchange of information.
Spain and Portugal adopted this proposal in May 2010 which in effect extended the obligation to report naked short selling to all Spanish and Portuguese shares while introducing the adoption of CESR thresholds of 0,2% and 0,5% of an issuer's capital for private and public disclosure
The disclosure of short positions as per CESR's proposal was widely backed by firms.
The feedback to this will be used to support the European Commission's proposal on short selling which is expected to be made public in a matter of days.