CEPS © 2020

The European Green Deal after Corona Implications for EU climate policy
Policy Contribution

Short Selling: A known unknown

by Piero Cinquegrana
29 May 2009

Short Selling: A known unknown

Piero Cinquegrana

Download Publication

2302 Downloads

Fears of systemic meltdown following the collapse of Lehman Brothers in September 2008 led to uncoordinated regulatory interventions around the world to ban or restrict short selling, a technique that allows one to profit from falling stock prices. The suspicion that ‘bear raids’ were having a negative impact on stock prices in general and financial stocks in particular motivated these regulatory developments. The ban on short selling reignited a long-standing debate on this controversial technique.
This ECMI Commentary explores three fundamental questions posed by short selling. The first issue is of a conceptual nature: Is short selling legitimate and, if so, is it beneficial for financial markets? The second issue is: What is the difference between naked and covered short selling? The third question is legal in nature: Is short selling consistently defined across jurisdictions?


About the Author


  • Author
    Piero Cinquegrana
    Piero Cinquegrana
Short Selling: A known unknown
Download Publication

2302 Downloads