In Germany, the Federal Financial Supervisory Authority (BaFin) can prohibit short sales on the securities market if there is a threat of significant market disruption. It did so for the first time for the shares of eleven banks in the wake of the subprime crisis in September 2008, when the volume of such transactions raised the threat of further market disruption. Around the same time, the U.S. Securities and Exchange Commission required hedge funds to disclose their short selling on a daily basis. In the wake of the Greek crisis, the German Federal Financial Supervisory Authority again issued a short-selling ban on shares of ten German institutions, eurozone government bonds and credit default swaps. The Abuse Act, which came into force in July 2010, placed the prevention of such transactions on a new legal footing. – Meanwhile, short-selling bans, as popular as they are in public opinion, are viewed critically by experts. After all, if market participants harbor the expectation that a price will fall in the future, and they sell government bonds of highly indebted countries as a result, for example, then economic reason demands that we ask why speculators do not have confidence in these securities. The causes of negative expectations would have to be addressed; short selling is only the symptom: the visible marker of a lack of confidence in future market conditions. – On March 26, 2012, Section 30i of the German Securities Trading Act (WpHG) and the Net Short Position Regulation (NLPosV) came into force. The regulations introduce extended notification and publication obligations for net short positions and determine, among other things, the electronic reporting channel. Details are available on the website of the German Federal Financial Supervisory Authority. – See aggregation, derivatives transactions clearing obligation, derivatives transactions reporting obligation, short selling, reporting obligation, Abuse Act, speculator. – See BaFin Annual Report 2008, p. 147 (prohibition by BaFin; justification; explanations), Bafin Annual Report 2009, pp. 173 f. (new legal situation), Bafin Annual Report 2010, pp. 185 f. (entry into force of the Act on the Prevention of Abusive Securities and Derivatives Transactions [WpMiVoG], which grants BaFin new powers),pp. 190 ff. (details of the new legal situation), BaFin’s 2012 Annual Report, p. 171 (EU Short Selling Regulation), p. 172 et seq. (transition to German law in detail), and the respective BaFin Annual Report, chapter “Supervision of Securities Trading and Investment Business,” Financial Stability Report 2011, p. 75 (blanket short selling bans should be rejected).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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