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.