27/07/2009
AMF extends ban on short-selling until January 2010
The college of the AMF confirmed that it has decided to extend measures announced in September 2008 which prohibit short-selling of a list of certain financial sector stocks until January 2010. The college wishes to wait for the results of a consultation announced on 8 July by the CESR, whose proposals it generally adopts, before deciding what course of action to take in France, the AMF says in a statement published on 24 July. The AMF places emphasis on the face that it considers it essential for a seller of shares to transfer the shares sold over a regulated market or a multilateral trading platform which processes the transfer J+3, which means three days after the date of the transaction. For these purposes, “the short-seller must have have signed an agreement in principle with a securities lender previous to trading, stating that it will be in a position to deliver the shares within J+3.” The AMF has also invited IOSCO and the CESR to study the following complementary measures “with the closest possible attention,” which, the regulator suggests, would serve to perfect the regulatory framework for short-selling. 1. All investors shall be required to inform their intermediary if an order they are about to pass is related to a short-sale. 2. All intermediaries shall be required to pass on this information to the regulator, in such a manner that the regulator shall be able to pass on aggregate information to the market. 3. Short-selling parties shall be prohibited from making a trade at a lower price than the most recent market price. 4. The regulator shall be in a position to prohibit short-selling in exceptional circumstances, as for example in the case of a brutal collapse in share prices exceeding a pre-defined threshold.
