RSSThe Global War Against Short Sellers
By John C. Lee | September 22, 2008 | 11:59 AM | 0 Comments
At the time of this writing, there are 10 countries that have either issued additional warnings, restricted short-selling of certain securities, or banned short-selling outright for vary durations.
Most of you already know that the United Kingdom banned short-selling in financial issues. This remains in effect until January 19, 2009. The measure may be extended to ban short-selling in other sectors. You also know that the U.S. banned the shorting of 799 financial stocks, which ends on October 2 unless the ban is extended.
After the U.S. markets closed on September 19, the Ontario Securities Commission (OSC), supported by the Canadian Securities Administrators (CSA), issued a temporary order to ban short-selling effective until October 3. The following financial securities are affected:
• Aberdeen Asia-Pacific Income Investment Company Ltd. (FAP)
• Bank of Montreal (BMO)
• Bank of Nova Scotia (BNS)
• Canadian Imperial Bank of Commerce (CM)
• Fairfax Financial Holdings Ltd. (FFH)
• Kingsway Financial Services Inc. (KFS)
• Manulife Financial Corp. (MFC)
• Quest Capital Corp. (QC)
• Royal Bank of Canada (RY)
• Sun Life Financial Inc. (SLF)
• Thomas Weisel Partners Group Inc. (TWP)
• Toronto-Dominion Bank (TD)
• Merrill Lynch & Co, Canada Ltd. (MLC)
Jean St-Gelais, Chair of the CSA and President & Chief Executive Officer of the Autorité des marchés financiers (Québec) stated:
“The CSA is supportive of the action taken by the OSC today, other jurisdictions in the CSA will be taking similar action today, or in the coming days.”
If that’s the case, we’re talking about a possible 12 agencies to follow the OSC (Ontario):
• Alberta Securities Commission
• British Columbia Securities Commission
• Manitoba Securities Commission
• New Brunswick Securities Commission
• Newfoundland & Labrador Dept. of Gov’t Services – Consumer & Commercial Affairs
• Northwest Territories Registrar of Securities – Legal Registries Division
• Nova Scotia Securities Commission
• Nunavut Registrar of Securities – Legal Registries Division
• Prince Edward Islands Securities Office – Consumer, Corporate & Insurance Division
• Quebec Autorité des marchés financiers
• Saskatchewan Financial Services Commission
• Yukon Territory Superintendent of Securities – Community Services
In addition, 5 European countries, Australia and Taiwan also joined in on the fight.
Germany announced that they have halted short-selling in the following financials:
• AAreal Bank
• Allianz
• AMB Generali
• Commerzbank
• Deutsche Bank
• Deutsche Boerse
• Deutsche Postbank
• Hannover Re
• Hypo Real Estate
• Munich Re
This ban by the German Federal Financial Supervisory Authority is in effect until the end of the year.
The ban for the US is in effect until October 2, October 3 for Canada, and January 16 for the UK.
Ireland banned the shorting of four of its financials:
• Bank of Ireland
• Allied Irish Banks
• Irish Life and Permanent
• Anglo Irish Bank Corp.
The Irish Financial Regulator also requires positions of more than 0.25% of the issued share capital be disclosed every day starting on September 23 at 3:30PM.
In the most dramatic move against short-sellers yet, the Australian Securities and Investments Commission (ASIC) banned short-selling of all listed shares. The ASIC noted: there was a risk that if Australia didn’t follow with its own ban that there would be a risk of “unwarranted activity” in the Australian market.
France’s AMF stated that they will take similar actions as they increase monitoring of short-selling as well as deliver a warning against naked short-selling. Switzerland also issued a warning against naked short-selling on its SWX exchange in Zurich. Portugal’s CMVM announced that they will incorporate similar “extraordinary measures” against short-selling. It is possible that most or all European regulators will follow the Committee of European Securities Regulators’ (CESR) extensive efforts to limit or ban short-selling.
Taiwan banned short-selling of 150 stocks for two weeks, effective until October 3. The securities are listed on the Taiwan 50, Taiwan Mid-Cap 100, and Taiwan Technology indices. Short-selling is banned when they trade below the previous session’s close!
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