Spain has banned short-selling of shares to try to limit price moves after markets fell quite sharply amid continuing fears the country may need a full-scale bailout.
Spain’s market regulator blocked the practice for three months, until October, to try to restore a bit of order after sharp falls in bonds and shares. Italy, another country in trouble with its debt, has also banned short-selling of financial stocks for one week.
Short-selling is a technique used by investors who think the price of an asset, such as shares, will fall. These investors borrow the asset from another investor and then sell it in the relevant market with the aim of buying it back at a lower price and return it to its original owner, making a nice profit along the way.
Would it not be beneficial and solve a lot of problems to have a permanent worldwide ban on this and other similar destructive practices?