Greek Central Bank Accused Of Encouraging Naked Short Selling Of Its Own Bonds

Tyler Durden's picture

From the FT, and yes, you can't make this up. First we find out the biggest speculators in Greek CDS was Greek Post Bank, and now we discover that Greece itself made shorting of its cash bonds almost a requirement via a change in settlement from T+3 to T+10. Unreal.

A Greek former European Commissioner has accused the country’s central bank of encouraging naked short-selling of Greek bonds by altering the regulations on its electronic bond trading platform last year.

Vasso Papandreou, a senior deputy in the governing socialist party, made the charges on Wednesday in a written question to parliament.
“The Bank of Greece knew the country’s negative fiscal situation. Why did it facilitate the speculation?” asked Ms Papandreou, who is not related to George Papandreou, the Greek prime minister.

Her question, supported by another 10 deputies, reflects growing concern in the Socialist party over an apparent policy contradiction in the handling of Greece’s debt crisis.
The bank first extended the settlement period for transactions on HDAT, the bond trading platform, from Tplus3 (trading plus three days) to Tplus10.

The change was reportedly made in response to a request from the Association of Greek Banks, which represents market-makers in Greek bonds.

But it gave short sellers a longer window of opportunity to push down the price of a Greek bond before delivering it on the settlement date, Ms Papandreou said.

The central bank also abolished penalties for investors which did not deliver a bond on the settlement date in a move that allowed failed transactions to be continuously recycled.

“Effectively the central bank introduced regulations for bilateral selling that apply to an over-the-counter market – although HDAT’s bond trading platform is part a regulated European market,” she said.

Last month the Bank of Greece reversed both decisions after a Greek newspaper revealed details of much increased short-selling and large numbers of unsettled transactions.

Settlement of transactions in Greek bonds was set at trading plus one day – a move that effectively ended short-selling of Greek bonds, according to traders.

HDAT said the change was made because of “massive debit positions” in its transactions.

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Freebird's picture

This akin to pimping your wife, no?

They obviously had some good lessons from GS.

Shylockracy's picture

Freebird, doing G*d's job can be trying sometimes, but there's nothing new under the sun. GS may have taken from ol' Abraham's playbook who pretended to be his wife Sarah's brother so he could sell her as a prostitute to the Pharaoh. No, the Pharaoh's name was not Karamanlis nor Papandreou.

"ain chadash tachat hashemesh"...

Freebird's picture

Guess i've just lived a sheltered life. I must say if your avatar is what I think it is, you have exceedingly good taste but respectfully suggest you change it for a different pound of flesh...before the zhaitchers launch a posse.

Sucks_to_be_Smart's picture

In all honesty, this should be filed under the comedy folder.  No one cares or disbeliefs what happens to Greece now.  Outside of a) waking up tomorrow and finding out Greece literally blew up or was completely destroyed by a bomb/natural disaster, or b) Greece leaves the EMU, people will shrug and move forward unaffected.  Honestly? I think a) is more likely. 

Mongo's picture

Say after me



Tense INDIAN's picture



digalert's picture


Jim buybuybuy Cramer on CNBS just said

"there must be a collapse over there before anything gets better"

No bailouts?

kaiten's picture

Busy. Shorting the shorts ;p

Panafrican Funktron Robot's picture

I think Leo weighing in on this is almost a requirement.

Cheeky Bastard's picture

Alright, you somabitches; i have had it.

stop throwing shit at Leo. The man has his convictions, the same as any of us. If you want a fucking echo chamber, move on to MW or shut the fuck up. 

Canucklehead's picture

Cheeky, you are not doing a service on leo's behalf.

Leo can speak for himself.

Shame on you...

Freebird's picture

yeh maybe, but perhaps Leo cannot get across 8 different threads at the same time Nucklehead.


Cheeky Bastard's picture

Sentiment towards Leo is a symptom of people wanting to hear only what suits them. I could have easily named MHFT or Master Bates or any of the people who collect most junks around here. It slowly becoming an echo chamber, and that sucks. 

And what the fuck is with all the  PC/grandpa style rhetoric in your post; im not fucking 12 and im not polite, and i never obey. 


Mesquite's picture

Right on, Sir..

When folks start junking different opinions, we're going down the wrong road..

And bringing down the quality of this site..

Temporalist's picture

You will obey!


Damn that hypnotoad it's hiding...

Hephasteus's picture

Someone who we are in a situation that is evolving and is getting pestered by tons of people wanting to prove him "wrong" without even waiting for it to evolve.

I gotta go with cheeky on this one. One snide comment. Ok. Repetitive pesetering bullcrap comments. Not ok.

ZeroPower's picture

Who's. Hint: the i loses the bottom part to it.

ZackAttack's picture

I understand your position, but he repeatedly cast Greece's problems as the result of speculative attacks by a vast, shadowy cabal led by George Soros and a bunch of other Princes of Insufficient Light. It was indefensible bullshit.

I agree, he gets piled on a lot. This particular one is justifiable.

Renfield's picture

Sorry, Cheeks, gotta disagree.

1) You want a bunch of commentors who call it like they see it to be polite to Leo b/c he *has convictions*? You're not polite, but you tell everyone else here to be polite? What's your encore, talk up a strong dollar policy while you short it to hell? Fuck that.

2) This is FIGHT CLUB. We can be as rude to whoever we want, whenever we want and as much as we want. It's the goddamn ethos around here. If Leo or you are sensitive, then you should go down on your knees & thank the crowd here for toughening you/him right up.

3) Speaking of moving on, you want to demand niceness & restraint to someone who's wrong half the time, and gives as much attitude as he gets, maybe *you* gotta move on...try one of those nice MSM media blogs. If you're sweet enough to the permabulls they might even print it as your Letter to the Editor.

4) Echo chamber is also known as 'majority opinion'. Happens. You want it to stop, go agree with Leo or congratulate him or back him up on one of his comments. You do it, anyone else who agrees with you does it, and there you go, it's not an echo chamber anymore. AND. Bullshit walks anyway - girlymen leave when they're spectacularly wrong and too embarrassed to show up, not b/c not enough people are being sweet to them. Hopefully Leo can take it.

I love your anger & your style but demanding play-nice to Leo - or anyone else - gets a big huggy Fuck You Very Much from me to you.


Mitchman's picture

Dear CB,


I happen to very much admire your posts as well as Leo's (to say nothing of his photo attachments and have acknowledged both in my posts) and had the impression (perhaps mistaken) that having a sense of humor was an important part (and one of the best parts) of being part of the ZH community.  Leo, of course, has nothing to do with the various goings on of the Greek authorities, so it was a perfect opportunity to do a little leg pulling.  It is unfortunate you did not interpret at least my comment (if I can be so presumptuous as to believe that my comment was one of the ones you were addressing) in the spirit in which it was given.

Panafrican Funktron Robot's picture

Cheeky, I actually agreed with you and Leo in the other thread regarding the EU needing to do everything in it's power to prevent a Greek default, along with my opinion that a bond haircut being much more likely, and that bond haircut being the real reason for the naked short "ban"/notification of enforcement.  Further, I think Leo has very good insight and analysis, particularly on pensions, and I'm glad he's a regular on this board.

Having said that, Leo is an unabashed Greece cheerleader.  This is obvious.  I don't even fault him for this, the guy loves his country 'o ethnic origin.  Regardless, poking fun at his ass for this is fine, and further, I am actually interested in his opinion on this topic.

So, when you decide to make a generalization about my opinions on things and lump me in with a particular group, my natural reaction is probably similar to yours, which is to want to encounter you personally and make your face significantly less pretty than it's current status.  I don't particularly desire to have these thoughts about you, so please (as a request, not a demand) consider refraining from this particular behavior in the future.  Or, as one might less politely put it, fuck off and die under a flaming pile of elephant shit.

Mr Lennon Hendrix's picture

Obviously, George Pap is a bildeberger and the illuminatti are betting with free moeny to burn the system down.

The only reason they do it systematically is so no one notices, and that they are demagogues.

Miyagi_san's picture

Fuel for the Fire.....I would hate to be a goat in Greece

RowdyRoddyPiper's picture

 Buy the dips!  The tsatsiki is delicious.

carbonmutant's picture

Is the EURO rallying on rumors of a Greek withdrawal from the EU?

Freebird's picture

Touched 1.24 on release of Fed minutes. Now where is that new short entry?


Renfield's picture

Yeah been wondering that too. Depends if Tokyo wants to play. If so, I've heard numbers as high as 1.30. We'll know if Tokyo's in soon enough.

This was the SNB show and they bought about half the euros on the planet but the ECB and the Fed with their goddamn 'rate checks' were very publicly behind it too. It was an intimidation play as much as anything.

But rumour has it that China was selling into the rallies. If PBOC isn't supporting it then it might not make it past today...but we'll know more I bet when Tokyo opens. And the only people who really know are a handful of CB mofos who'll let it fall when they're comfy with it.

EURUSD & EURJPY doing the Swiss Consolidation at the IMF-approved levels of 1.24 & 113.5 (approx.) for the last few hours now. Thought I was looking at the EURCHF chart a few times.

How to kill a market: play wackamole with every red candle longer than 8 pips. Good luck keeping that up with THE major pair. But for now every seller has gone to ground.

PS: Or you can go with the non-intervention solutions. 1) It was 'ready to bounce'. You know, the currency got a bit tired of red and felt like a change, decided on its own to do green for awhile. 2) It was a 'crowded trade', which of course always means a reversal, except when it doesn't. 3) There was so much damn good news coming out of Europe, especially today, that everyone decided they gotta have it. 4) Some technical anlysis bullshit.

Freebird's picture

LOL. Nice. Its getting late in the day and I cannot believe intervention really happens, so I will just go with your options 1,2, 3 & 4

Double down's picture

I wonder when the marriage between the UST and the FED will become as amicable as the Greek one.

Dilemmas, dilemmas

ratava's picture

what if the europeans have been right all along? suppose you wanted to manipulate the EURUSD lower. wouldnt blowing up assorted CDS be the cheapest way of doing it?

MiguelitoRaton's picture

This is shaping up like a classic bust-out a la the Mafia.

1. Build up credit

2. Run-up that credit

3. Declare bankruptcy

Greece is at step #2 and they are now promoting their own banks buying CDS against their own debt. The next step is to declare all foreign debt null and void and move from the Euro to the Drachma again. Seriously, why should they undergo austerity for the benefit of foreign banks, when their credit lines are cut anyway? Why not go out in style and give the foreign banks and investment banks the bird, while you go your own way...and make money on the CDS? OK maybe those are cancelled by the other countries (e.g. Germany), but still, why not?

Grand Supercycle's picture


EURUSD buying support is still evident.

Daily chart is now extremely oversold, will post a chart soon.

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