Here at Dealbreaker we love short sale bans. Nothing inspires confidence in an asset so much as a government telling you that you can't sell it, especially when the government in question is taking time out from a busy schedule of bunga bunga parties to give a firm but loving hand to the equity markets.
So we were excited to see that, as the Italian equity and government bond markets melt down, politicians and regulators are sharpening their knives to come after the evil speculators who must be behind the drop. Italy is now requiring anyone who is net short more than 0.2% of the shares of an Italian listed company to disclose their position to regulators, with an updating requirement for changes of 0.1% or more, from now until September 9. More excitingly, there is already talk of banning naked shorts, regular shorts, sovereign CDS, etc. followed. Barry Ritholtz succinctly explains the reasoning:
In a classic act of misdirection, Italy is ordering short sellers to disclose their positions, because after all, the entire European credit crisis was caused by analysts who identified over valued stocks.
Exactly! You may be surprised to learn that this has not done much good so far - the disclosure requirement went into effect this morning in Italy and the FTSE MIB index was off 3.96% today, after shedding 3.47% on Friday and over 21% total from February highs. Perhaps Italy needs the moral courage of Benjamin N. Dover III to right this wrong.
Italy Orders Short Sellers To Disclose Positions [Bloomberg]