January 2009
Response to CESR’s call for evidence on regulation of short selling
The LSE Group has responded to CESR’s call for evidence on regulation of short selling. While we recognise that regulatory intervention was taken in a number of countries due to widespread concerns about market volatility, we believe that short selling is an integral part of the proper functioning of equity markets and a legitimate investment technique.
We believe that bans on short selling are both ineffective in countering concerns about market volatility, and damaging to the wider interests of market participants. However, we recognise that other measures may be desirable, such as increased disclosure and robust procedures for dealing with late settlement (for example, we feel that the UK and Italian practices of “buying in” and guaranteed delivery are important safeguards to deal with failed settlement).
We strongly support CESR in working to achieving greater convergence between CESR Members in the short-selling space. The situation in September 2008 where numerous regimes were implemented in EU Member States with very little (or no) consultation or coordination across Europe was not optimal for markets.
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