The U.K.’s market regulator said a temporary short-selling ban on Barclays Plc, HSBC Holdings Plc, and 32 other financial companies will be lifted as planned and investors can begin shorting the shares on Jan. 16.
Formal confirmation by the Financial Services Authority, today follows a preliminary announcement last week. It goes against moves by regulators in Ireland, Germany and France, which have extended similar halts until March. The FSA’s notice also repeats that reporting of short positions that already exist in the financial companies will last until June.
“The decision follows strong support for the proposals on which the FSA consulted last week,” the London-based agency said today.
The FSA’s ban was introduced in September after politicians and investors blamed short-selling for market instability. Regulators and bodies around the world are trying to grapple with measures to stem the worst financial crisis since the Great Depression.
Short-selling is when hedge funds and other investors borrow shares they don’t own and sell them in the hope that their price falls. If it does, they buy them back at the cheaper price, return them to their owners and pocket the difference.
The prohibition will be lifted at midnight, meaning investors can start shorting banks on Jan. 16. The FSA said on Jan. 5 that while the ban will be lifted, it can be reintroduced at any time.
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