While repeating the same thing and expecting a different result is the definition of insanity, the Italian and now Spanish regulators, in their wisdom, have banned short-selling once again (supposedly not just on stocks but OTC derivatives also) - because, of course, this is all speculation and not just real money exiting the increasingly encumbered 'bail-in-able' worst banks in the world. When will the long-selling ban begin and what does this S-S ban mean? Very little in reality - within a few days of the last ban, following a very short-term squeeze - European banks were back below the pre-short-sale-ban level as we noted here and here. The trouble with the ban is that managers will look to hedge the implicit stress that this means those banks are under (that may otherwise be manipulated out of the price). How to do this? Well, last time, it was Morgan Stanley that was the most correlated on the way down and was the worst performer immediately after the ban began - and this time seems like it should be no different. Already in the pre-market, MS is -4%, notably underperforming its peers.