Shares soar due to temporary ban on short selling

Shares soar due to temporary ban on short selling



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 Last night the FSA temporarily banned short selling of a group of financial stocks following the backlash of the HBOS buyout.

 

 

 

Now come today, almost 30 companies that have been named and saved by the City regulator have experienced rapidly rising share prices.

 

 

 

The FSA had threatened to declare the positions of short-sellers labelled “spivs and speculators” by Alex Salmond, Scotland’s First Minister, leading many of the guilty to close their books for fear of becoming shunned in City circles.

 

 

 

Although the technique of short selling – borrowing a security from a broker and selling it, with the understanding that it will be bought back later at a cheaper price – is perfectly legitimate, many public figures have attacked investors trying to profit from the economic crisis and causing it to escalate.

 

 

 

Short selling was first blamed for HBOS shares plummeting, forcing it into a rescue merger with Lloyds TSB. However, city commentator David Bulk of BCG Partners said blaming the falling stock prices on short sellers was “totally naïve” and “not the real picture.”

 

 

 

But in terms of fast relief, the temporary ban appears to be a success with the FTSE 100 jumping 315.1 points to 5195.1 points this morning. 

By Louise Fernley

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