Good news - Germany bans shorting! Good news - Germany bans shorting!
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  1. #1

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    Default Good news - Germany bans shorting!

    Traders are predicting chaos on the world's second-largest government bond market after the German authorities on Tuesday announced a ban on all naked short-selling in European public debt, as well as shares in the country's 10 largest financial institutions.

    The unprecedented step saw the euro sink to a four-year low after Germany said that from midnight shorting of credit default swaps of any European government would be banned. The prohibition is an attempt to counter speculators that Berlin believes are trying to destabilise the region's sovereign bond market.

    Traders greeted the move by BaFin, the German regulator, with a mixture of anger and astonishment. One bond trader said he expected Wednesday's trading session to be one of the most volatile in living memory: "It will be complete chaos, I really don't know what the Germans think they are doing."

    One immediate effect was that the cost of insuring European government debt fell as markets were hit by a so-called "short squeeze" where investors with short positions are forced to offload their holdings and buy the bonds, causing the price to increase.

    This is certain to please the German authorities, who have waged an increasingly hostile war of words with supposed speculators.

    No immediate reasoning was given for ban, which will also prohibit the naked short-selling of shares in major German financial institutions, understood to include insurer Allianz and Deutsche Bank.

    Traders warned that the measures could lead to an immediate backlash from investors around the world, adding that the ban was likely to be effectively unenforceable. It will not stop traders from shorting the bonds and shares using other European markets.

    More: Market chaos warning after German ban on shorting - Telegraph


  2. #2

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    Quote Originally Posted by AtW View Post
    ...One bond trader said he expected Wednesday's trading session to be one of the most volatile in living memory: "It will be complete chaos, I really don't know what the Germans think they are doing."
    That would be tomorrow then

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    Why is it the only time in years I choose to earn euros and on a decent rate too this happens...

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    Quote Originally Posted by scooterscot View Post
    Why is it the only time in years I choose to earn euros and on a decent rate too this happens...
    Start asking to be paid in iPads and iPhones...

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    KUATB

    ZeroHedge put it nicely: "Europe today officially fell off the stupid tree and hit every branch on the way down."
    How did this happen? Who's to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you're looking for the guilty, you need only look into a mirror.

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    Is it worth stocking up on beans?

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    Quote Originally Posted by TimberWolf View Post
    Is it worth stocking up on beans?
    Only if they are Milan beans...

    HTH

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    Quote Originally Posted by AtW View Post
    Start asking to be paid in iPads and iPhones...
    They don't blend as well as euros....

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    Quote Originally Posted by AtW View Post
    Only if they are Milan beans...

    HTH
    They were worthless before this crisis. Nah, put your money into Pot Noodle shares, that is where the future lies.

    HTH
    “The period of the disintegration of the European Union has begun. And the first vessel to have departed is Britain”

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    Quote Originally Posted by TimberWolf View Post
    Is it worth stocking up on beans?
    Like I said the other week. Buy euro's - they may be collectibles one day.
    How did this happen? Who's to blame? Well certainly there are those more responsible than others, and they will be held accountable, but again truth be told, if you're looking for the guilty, you need only look into a mirror.

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