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Germany ‘to extend short-selling ban’

Posted by seumasach on May 25, 2010


25th May, 2010

Germany is considering widening a ban on “naked” short-selling on some financial stocks to cover all German-listed stocks, proposals have shown.

Short-sellers usually borrow shares, sell them, then buy them back when the stock falls.

“Naked” short-selling is when a trader sells financial instruments he has not yet borrowed.

Last week Germany banned naked short-selling at its 10 most important financial institutions.

But the draft proposal from the Finance Ministry now suggests the ban will be extended to shares and derivatives in all companies.

According to the Wall Street Journal, the proposal states: “Naked short-selling of stocks and the debt of eurozone states that are listed on a domestic exchange in a regulated marketplace will be forbidden.”

The proposals are expected to be discussed by the German cabinet next week.

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