NEWS

London, November 9 – A report released today by the UK Treasury’s Asset Managers Working Group on European Union regulatory proposals defended the practice of short selling as a means of creating “deep two-way markets” and allowing for effective risk management.

“Maintaining liquid markets is crucial to the industry’s ability to deliver the best outcomes for investors, and short selling is integral to maintaining two-way markets as well as to risk management,” said the report, Asset Management: the UK as a Global Centre.

“As the ban on short selling took hold last year, it had a number of undesirable and unintended consequences for those with legitimate intention. It is welcome that internationally regulators appear to have recognized that outright bans, save for naked shorting, do more harm than good. “

The report recommended that “all avenues to maintaining market liquidity and efficiency should be promoted and protected. Unless evidence shows that such restrictions are necessary for market stability, then regulators should avoid imposing investment restrictions – e.g. short selling – which could have substantial adverse consequences for the effective operation of markets.”