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Germany lifts ban on financial stock short-selling

Source: Reuters - Mon 1st Feb 2010

Germany has ended a partial ban on the short-selling of financial stocks, letting a measure designed to reduce trading volatility lapse at the end of January, financial watchdog Bafin said.

"The situation on financial markets has improved so much over the last months that a further extension of the emergency measure, which Bafin enacted at the height of the crisis, was no longer needed" the stock market watchdog said in a statement on its website.

"However, Bafin is continuously monitoring financial market developments and, in the event of renewed deterioration, will issue new short-selling regulations."

Short-sellers are investors who borrow shares and sell them on in the hope of buying them back at a lower price to make a profit.

Bafin's ban applied to an especially high-risk form of trading called "naked" short selling, where the trader sells stock he has not yet borrowed.

Bafin had extended the ban three times since it was introduced in September 2008.

Stock market regulators around the world instituted curbs on short-selling to halt the downward spiral of financial stocks following the collapse of U.S. investment bank Lehman Brothers.

French market watchdog AMF last week said it was prolonging its short-selling ban until further notice, adding that it was working with other EU market regulators to find a permanent,Europe-wide solution.

Bafin's ban had applied to shares in the following companies: 

- Aareal Bank

- Allianz

- AMB Generali Holding

- Deutsche Bank

- Commerzbank

- Deutsche Boerse

- Deutsche Postbank

- Hannover Re

- Hypo Real Estate Holding


- Munich Re

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