While the ban on short selling is in force, Piazza Affari is trying to get back up after the loss storiescto (-16,92%) recorded on March 12. In the middle of the day, the Ftse Mib gained more than 11,12%, driven by Amplifon (+29,5%), Poste Italiane (+17,8%) and Bper (+17%).
SHORT SELLING: WHAT ARE THEY?
Also contributing to the finally positive trend of the Milan Stock Exchange is the shield provided in the morning by Consob which has decided to ban short selling, but only for 13 March, i.e. transactions of a speculative nature which make it possible to sell securities not directly owned by the seller and to subsequently repurchase them. The purpose of this type of business is to make a profit by betting on the difference between the (high) sell price of the stock and the (low) repurchase price.
The prohibition of short selling can be established in delicate moments and of high volatility for the Stock Exchanges because it is considered a practice capable of bringing down the prices of securities. The 2012 EU regulation on "Short Selling" in fact establishes that in the event of a significant drop that occurs in a single session, "the competent authority of the Member State of origin for that location verifies whether it is appropriate to prohibit or place restrictions on natural or legal persons as regards initiating short sales of a financial instrument on such trading venue or otherwise place restrictions on transactions in such financial instrument on such trading venue in order to prevent a disorderly decrease in the price of said financial instrument”.
THE CONSOB DECISION
Consob's decision it applies to as many as 85 listed securities. It had never happened that the stop involved so many shares, but the losses caused on March 12 by the spread of the coronavirus emergency and by careless words pronounced by the number one of the ECB, Christine Lagarde, have caused such an impetuous price change as to push the Authority to run for cover. In fact, Consob explained in a note that the provision was launched "taking into account the price change recorded by the securities on 12 March 2020 (exceeding the thresholds set by the aforementioned regulation", equal to 10%.
SHORT SELLING: THE 85 “BANNED” STOCKS
In addition to blue chips, the ban on short selling also affects other stocks active on other indices. Here you are the complete list:
Txt, Ascopiave, Lazio, Poste Italiane, A2A, Italgas, Exor, Banco Bpm, Snam, Amplifon, Campari, Fiat Chrysler Automobiles, Banca Generali, Buzzi Unicem, Prysmian, Enel, Leonardo, Salvatore Ferragamo, UBI Banca, Atlantia, Mediobanca, STMicroelectronics, Moncler, Cnh Industrial, Finecobank, Nexi, Generali, Recordati, Pirelli & C., Juventus Football Club, Tenaris, Intesa Sanpaolo, UniCredit, Saipem, Hera, Bper Banca, Terna, Azimut Holding, Eni, Unipol, Telecom Italia, Ferrari, Covivio, Sanlorenzo, Technogym, DoValue, De' Longhi, Banca Ifis, Fila, Anima Holding, Cerved Group, Fincantieri, Cairo Commuication, Ovs, Inwit, Ace, Maire Tecnimont, Tod's, Cattolica Assicurazioni, Iren, Reply, El En , Datalogic, Biesse, Telecom Italia Rsp, Ima, Geox, Mediaset, IGD, Interpump, Marr, Autogrill, Erg, Tamburi Investment Partners, Piaggio & C., Banca Monte Paschi Siena, Mondadori Editore, Credito Valtellinese, Banca Popolare Sondrio, Falck Renewables, Astm, Salini Impregilo, Zucchi, Fiera Milano, Illimity Bank.
It should be emphasized that Consob was not the only authority in Europe to move. The same decision was made by Spain's Comision Nacional del Mercado de Valores, which banned overdrafts on 69 securities. Their short selling will also be banned across all UK trading venues for the day.
