Short Sale Ban V2 Coming? Germany's Regulator To Require Short Financial Position Disclosure

Yesterday CDS speculators, today financial shorts, tomorrow the world. German regulator BaFin has learned absolutely nothing from America's 2008 brush with the short sale ban, and has announced that it is tightening disclosure rules on short-selling as related to ten financial company shares, saying it "wanted to ensure the stability of the financial system" is preserved. Ah, the old "if-the-world-is-threatened-by-vicious-speculators-you-must-acquit-of-irresponsible-fiscal-policies-and-mismanagement" defense. Additionally, BaFin, which is still trying to figure out just who it was that got cremated on the most ridiculous short squeeze ever (i.e., Volkswagen) said that the move was made necessary "by the need for the regulator to be informed quickly to take "targeted action" should such activity pose risks."

More details from Dow Jones:

Investors whose net short positions, covered or uncovered, are more than 0.2% shares of an individual company will be required to disclose the information to the regulator under the new rules. Positions of more than 0.5% will be published on the BaFin Web site without naming the holder.

The rule will be effective March 25, 2010, through Jan. 31, 2011. After that period, the regulatory will re-examine the situation.

BaFin said the move was made necessity by the need for the regulator to be informed quickly to take "targeted action" should such activity pose risks.

Short-selling refers a trader selling shares not already owned with the idea of buying them back later at a lower price. This strategy is often used by institutional investors like hedge funds and can have destabilizing effect on the markets.

The 10 companies affected are: Aareal Bank AG (ARL.XE); Allianz SE (AZ); Generali Deutschland Holding AG; Commerzbank AG (CBK.XE); Deutsche Bank AG (DB); Deutsche Boerse AG (DB1.XE); Deutsche Postbank AG (DPB.XE); Hannover Re AG (HNR1.XE); MLP AG (MLP.XE); and Munich Re AG (MUV2.XE).

Oh yes, because it is precisely short sellerw who threaten the solvency of firms like Deutsche Bank whose assets represent 84% of German GDP. Having more than half your balance sheet encumbered with toxic assets has absolutely nothing to do with risk of bankruptcy, now does it. How about the BaFin take some "targeted action" and force these banks to disclose the true sad state of their financial affairs? We are pretty confident that with full disclosure shorts would not be needed as there would be no longs lefts whatsoever.

Comments

[Anonymous]

V-2? Too soon ZH, too soon.

[chunkylover42]

This is smelling more and more like banning short selling just before the next wave of crisis is about to hit. 

[Cognitive Dissonance]

"German regulator BaFin has learned absolutely nothing from America's 2008 brush with the short sale ban..."

Unfortunately this sentence presumes that the German regulator is attempting to "fix" the problem. This is a bad assumption to make, though not assuming it grates against our sense of justice and fair play while bumping up against our own programing as to the purpose of the "regulators" and other sundry authorities.

If one takes the big picture view that the primary function of the regulators and other authorities is to skew the game in favor of the powers-that-be while simultaneously impeding everyone else, suddenly their actions make a lot more sense. Believing that the "cops" are there for the people is so yesterday.

[Anonymous]

+1.

For any puzzling government move, all you have to ask yourself is "How would this benefit banksters?"

[jc125d]

That pisses me off. I think I'll default on my term notes. No recourse, so KMA.

[Anonymous]

I don´t know but i guess much of the move up since March last year comes from short covering.
Guess balance is the keyword.

[Gunther]

In German Radio Station Deutschlandfunk was a report that NAKED short selling will be banned.

Shorting by selling borrowed stock will be permitted.

Edit:

Handelsblatt reports with a different tune:

[Finanzminister Schaeuble] setzt sich für ein Verbot ungedeckter Leerverkäufe ein.

My translation: The German minister of finance wants to forbid naked shorting.

http://www.handelsblatt.com/finanzen/boerse-inside/bafin-fuer-leerverkae...

[Anonymous]

Thanks for the clarification. There's a big difference between NAKED short selling (counterfeiting) and short selling (not counterfeiting).

[carbonmutant]

Gee they didn't have a problem when they were shorting the Dollar... but when it's the Euro they want protection??

[crosey]

It's the proverbial "not in my backyard (backdoor?)" perspective.

[Anonymous]

With two weeks to go in the front month somebody upped the ante today on further impending euro weakness:

Strike Symbol Last Chg Bid Ask Vol Open Int

24.00 UUP100320C00024000 0.07 Up 0.02 0.07 0.08 137,176 226,243

[Anonymous]

With two weeks to go in the front month, somebody upped the ante today on further impending euro weakness:

Strike Symbol Last Chg Bid Ask Vol Open Int

24.00 UUP100320C00024000 0.07 Up 0.02 0.07 0.08 137,176 226,243

[mark456]

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