Short Selling Ban and Spread Betting
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Trading Features / Strategies from Financial Spreads.
Please note the following ban has been lifted by the FSA. These changes will take effect at 00:00:01 on 16 Jan 09, permitting short selling of UK Financial Stocks.
For details see The End of the Short Selling Ban.
Short Selling Ban and Spread Betting
Original 'Ban' article dated 26 Sep 08
So how are the various short selling bans affecting spread betting? What can you do / what can’t you do?
Looking for some clarification, Financial Spreads sent us the following details on how they are treating the various bans.
For details you’re advised to contact your own spread betting company however the following probably serves as a good guide to what you can and cannot trade.
Financial Spreads – Short Selling Ban - A Guide
In line with regulatory instructions concerning Short Selling of UK, US, Irish, German and French Financial Stocks and all Australian Financial Instruments, Financial Spreads wishes to inform its customers that short selling in the mentioned instruments is temporarily prohibited.
A full list of the affected markets
In these designated markets clients may sell to close an open long position and may take new long positions but are now prohibited from entering into New Net Short Positions*.
Clients are not required to close existing short positions and may keep these open as long as they wish.
Where the onus is on Financial Spreads to ensure compliance of short selling restrictions markets will only remain available via telephone trading for the foreseeable future.
Where the onus is on the client (you) to ensure compliance of short selling regulations the markets will be available for online trading but, as required by regulations, Financial Spreads shall report to the relevant authorities ALL clients suspected of actions resulting in Market Abuse.
Market Abuse in this instance is defined by us as 'a suspicion on the part of Capital Spreads of the creation of a New Net Short Position by the client concerned'.
Please note that whilst it is our intention to help our clients understand the nature of these temporary trading restrictions we would like to remind you that it is your responsibility to keep up to date with any developments of this nature as these regulatory strictures apply to you as well as to us. These restrictions are likely to be imposed by an increasing number of jurisdictions across the globe and while Financial Spreads will do its best to update its clients on any such changes it will remain your obligation to be aware of any legal restrictions on your trading activity.
We trust that you will understand the reasons for our actions but if you have any queries then please contact Customer Services on the following numbers:
* New Net Short Position
No bet placed by any client in a restricted market should result in an overall exposure that would profit in any way from the fall in value of the particular market in which the bet has been placed (i.e. have an open, uncovered, short).
A client may open a new short bet on a UK financial stock with Financial Spreads if (and only if) he/she can demonstrate upon request that they have an equivalent long position via an alternative financial instrument at the precise time that the short position was placed. An equivalent position might be:-
- Stock held by the client in that same stock
- A long CFD position in that same stock
- An option in that same stock creating a long delta position equivalent to the sell bet
- A long (buy) spread bet in that same stock with another Spread Betting provider or in a different maturity date, but the same stock, with Financial Spreads.
- Any other recognised form of market instrument that can demonstrably be shown to have an outright long bias.
If the client subsequently wishes to close his long position in whatever instrument he/she MUST close the short first. Otherwise the sale would create a net short with the Spread Bet.
Ban on Short Selling - Restricted Markets
In line with regulatory instructions concerning Short Selling of UK, US, Irish, German and French Financial Stocks and all Australian Financial Instruments, we wish to inform our customers that short selling in the mentioned instruments is temporarily prohibited.
Whilst we do our utmost to enforce these new trading rules, please remember that we provide an execution only service and it is ultimately your responsibility to ensure that you abide with any regulatory restrictions on short selling.
We will endeavour to keep this list up to date but cannot guarantee its accuracy and it should be used as a guide only.
UK
- Admiral Group
- Alliance & Leicester
- Alliance Trust
- Arbuthnot Banking Group
- Aviva
- Barclays
- Bradford & Bingley
- Brit Insurance Holdings
- Chesnara
- Close Brothers Group
- European Islamic Investment Bank
- Friends Provident
- HBOS
- Highway Insurance Group
- HSBC Holdings
- Investec
- Islamic Bank of Britain
- Just Retirement Holdings
- Legal & General Group
- Lloyds TSB Group
- London Scottish Bank
- Novae Group
- Old Mutual
- Prudential
- Rathbone Brothers
- Royal Bank of Scotland Group
- RSA Insurance Group
- Schroders
- St James's Place
- Standard Chartered
- Standard Life
- Tawa
Ireland
- Bank of Ireland
- Allied Irish Banks
- Irish Life and Permanent
- Anglo Irish Bank Corporation
France
- Allianz
- AXA
- BNP Paribas
- Credit Agricole
- Dexia
- Societe Generale
Germany
- Aareal Bank
- AMB Generali
- Commerzbank
- Deutsche Bank
- Deutsche Borse
- Deutsche Postbank
- Hannover Ruckversicherung
- Hypo Real Estate
- MLP
- Muchener Ruckversicherung-Gesellschaft
US
The SEC has compiled a list of around 799 US incorporated companies, a list of which is available from the following link http://www.sec.gov/rules/other/2008/34-58592.pdf
Australia
The ASIC has prohibited the shorting of all indices and stocks. For more information please visit http://www.asic.gov.au/asic/asic.nsf
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by Financial Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'Short Selling Ban and Spread Betting' edited by SD, updated 16-Jan-09
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