SBAI Responds to CESR Proposal for a Pan-European Short Selling Disclosure Regime

Our response highlights our views on short selling.

Short selling plays an important role in global financial markets bringing many benefits to global economies including investor protection against market volatility, increased liquidity for all market participants, more efficient price discovery, dampening of price bubbles and prevention of other market inefficiencies, and ultimately more efficient capital allocation.

The ability to short sell makes investing more attractive at times of stress because it encourages investors to stay in the market even when prices are declining. By hedging positions through short sales, investors can continue to hold other stocks with the aim of achieving absolute returns. Without the option to short sell, investors are much more likely to withdraw from a declining market accentuating the market contraction during major crises.

CESR's Consultation on Short Selling Disclosure Regimes (8 July 2009)