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8/12/11

Turkey Curbs Short-Selling After Bans in Greece, South Korea

Turkey moved to curb short sales and threatened "severe penalties" for stock manipulation, joining nations from Greece to South Korea in seeking to stem bearish bets after the worst tumble in global stocks since 2008.

The Istanbul Stock Exchange raised the minimum cash or equity required to initiate a short-sale to 70 percent from 50 percent and said any violations could be met with "severe penalties," according to an e-mailed statement today. In a short sale, an investor borrows a security and sells it, expecting to profit from a decline by repurchasing it later at a lower price.

Regulators are investigating whether short sellers manipulated share prices after the ISE National 100 Index lost 19 percent this month. South Korea began a three-month ban on short sales yesterday and Greece started a two-month prohibition Aug. 9, while Italy increased disclosure rules for short sales in July.

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