4 EU states ban short-selling on banks shares

PanARMENIAN.Net - France, Italy, Spain and Belgium have banned short-selling on the shares of banks and other financial companies, BBC reported.

It follows sharp gains and losses in bank stocks in recent days, especially in France, on fears about their exposure to eurozone government debt.

Societe Generale has been the worst affected by the volatility, being forced to deny that its financial stability was at risk.

Short-selling is when traders profit from bets on the fall in a share price. It has been blamed for increasing recent market instability. Short-sellers usually borrow shares or bonds, sell them, then buy them back when the stock falls - pocketing the difference.

"Naked" short-selling is when a trader sells financial instruments he has not yet borrowed. All forms of short-selling are included in the ban.