Spain, Italy Ban Short-Selling

With Europe reeling under the weight of a record number of new coronavirus cases, especially in Italy and Spain, both countries announced today they they are banning short selling for the foreseeable future.

Spain’s stock market regulator CNVM on Monday banned transactions with Spanish shares involving the creation and increase in net short positions at least until April 17 following a steep dive in the market amid the coronaviarus epidemic. The prohibition covers short-selling even when such deals are covered by a securities loan, the CNVM said.

“The measure will enter into force tomorrow, the 17th of March, before the trading session begins and until the 17th of April, after the trading session is closed. It can be extended for additional periods not exceeding 3 months if the current circumstances persist,” it said in a statement.

At roughly the same time, Italy’s market regulator Consob said on Monday it was introducing a new 24-hour short-selling ban as the Milan bourse continued to slide hit by a coronavirus crisis in the country. The ban will apply to 20 stocks on Tuesday and follows a similar measure that was taken last Friday affecting 85 stocks.

Consob said it had also kicked off a procedure which will allow it to adopt further restrictive measures, introducing a more lasting ban on short-selling as envisaged by existing European regulation under exceptional circumstances.

The good news: unlike the Philippines, the two European nations plan on keeping their markets open. The bad news: with covid cases in both countries growing exponentially …

… it may be just a matter of time before both nations have no choice but to shutter their markets indefinitely.