[Newsflash n. 69]

The effect of the coronavirus on the economy is badly affecting also the stock markets and action has been taken by the EU competent authorities to mitigate the amplifying impact of short-selling, to reduce volatility and avoid inappropriate behavior of speculative investors. In particular:


Borsa Italiana is recovering after the shock of yesterday like other stock exchanges also thanks to the intervention of Consob, which today has banned short selling in 85 Italian shares (Resolution no. 21301 of 12 March 2020).

The prohibition was adopted pursuant to Article 23 of Regulation (UE) n. 236/2012 on short selling (“Regulation”), following the fall of the shares’ prices included in Attachment no. 1 of the Resolution, on the 12th March 2020, which, compared to the closing price on the previous trading day, was greater than the relevant threshold set out by the Regulation (i.e. -10%). Actually, Italy FTSE MIB plummeted by 16,92, its record loss ever.

The prohibition has applied to covered short sales, extending the scope of the prohibition of naked short selling, already in force for all shares from 1st November 2012 by virtue of the regulation (UE) n. 236/2012 on short selling. The exemption for the activity of market making (as defined by Article 2(1)(k) of the Regulation) remains applicable.

The ban will apply until the end of the trading session of today, Friday 13th March 2020, on the MTA market of Borsa Italiana. Consob can extend such measure for a further period not exceeding 2 trading days if, at the end of affected trading day, there is, despite the measure being imposed, a further significant fall in value (of at least 5% from the closing price of the first trading day).


In Spain, after the IBEX-35 fall of 14 per cent, the CNMV has decided to ban short sales during trading session of today, 13th of March, on all liquid shares admitted to trading on the Spanish stock exchanges whose price, on March 12th, has fallen  more than 10% and on all illiquid shares (in accordance to Delegated Regulation 918/2012) whose price has fallen more than 20%.


In UK, the FCA has notified the market that it has temporarily prohibited short selling in those Italian and Spanish stocks

The UK Authority has decided to take the action to assist other financial autotithies, taking into account: a) a similar price fall in the instruments on UK trading venues and b) the volume of trading in the UK

This measure is effective until the end of the trading day on 13 March 2020.


In the rest of the world, other countries heavily affected by coronavirus have taken measures to reduce the magnifying effect of short selling trading on markets slump. In particular:


In South Korea, the Financial Services Commission decided to impose a ban on stock short-selling in the KOSPI, KOSDAQ and KONEX markets for a period of six months from March 16 to September 15.

During the six-month period, the current limits on stock buybacks will also be lifted for listed companies.
In order to prevent excessive offsetting trading by stock companies, the minimum requirement for collateral coverage ratio for stock companies will be lifted.


At the beginning of March, the Indonesia Stock Exchange suspended all short-selling of stocks to counter the coronavirus impact on the country’s economy.


Legália will continue to monitor the development of the market situation.


Vito Vittore

Elena Pagnoni

Roberta Talone