Spain's stock market regulator, the Comisión Nacional del Mercado de Valores (CNMV), decided yesterday to lift a ban on short selling Spanish financial stocks in force for the past six months. The decision to end the ban on shorting stocks mirrors decisions announced by France and Belgium on Monday. Italy has not confirmed whether it will keep or lift the ban and must decide by February 24.
"Extreme volatility, continual instability and uncertainty about European stocks, especially financial stocks, led to the adoption of temporary restrictions on transactions that create or build short positions within the Spanish financial sector. The conditions that led to the restrictions have faded during the past several weeks," the CNMV said in justifying their decision.
The regulator assured that steps taken by the EU to contain public debt market instability, reinforcing fiscal discipline, the European Central Bank's (ECB) long-term debt issues, and the cleanup of the financial sector in Spain have contributed to Spain's decision to lift the short selling ban.