Short Selling Updates

March 13th | 2020

Around the world, regulators are beginning to attempt to stabilize markets. We are seeing a few techniques that were used during the financial crisis re-emerge, particularly in Italy and South Korea, both of which have been hit hard by COVID-19. Spain and several Asian jurisdictions also appear to have followed suit.

Temporary Short Selling Bans

Short selling was banned for trading on Friday March 13 for certain stocks in Italy and Spain pursuant to the detailed release below.

The Italian ban affects 85 stocks on the Borsa Italiana. Notably, this ban applies to short sales backed by stock lending. Naked short sales have been prohibited since 2012.

The Spanish ban affects 69 stocks, including all those that dropped more than 10% on Thursday, and all illiquid stocks that dropped more than 20%. Market making activities, however, are exempt from the ban.

The U.K.’s Financial Conduct Authority is applying short selling bans to all U.K. trading venues similar to those applied by both Spain and Italy in their respective jurisdictions.

Long Term Short Selling Bans

Earlier this week, South Korea's Financial Services Commission announced it will ban all short-selling in Korean venues for six months, from March 16 to September 15.

New Uptick Rule

The Stock Exchange of Thailand has implemented an uptick rule to rein in short sales. The rule takes effect today and is set to expire on June 30, 2020.

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