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London regulators to lift ban on stock market short selling


Published :
Tue, 06 Jan 2009 07:53
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London - A temporary ban on the practice of short-selling imposed at the height of the banking crisis last September will be lifted by mid-January as planned, the Financial Services Authority (FSA) in London said Tuesday. The regulatory body said that the three-month ban would expire on Jnauary 16, but could be reinstated if necessary.

Short-selling is when investors, typically hedge funds, borrow shares in a company which they then sell in the hope of buying them back later at a lower price in a process not dissimilar to betting.

The FSA introduced a temporary ban on the practice for 34 financial stocks in September last year due to calm the turmoil on financial markets.

However, the FSA had been urged to maintain the ban, given the continuing problems in the stock market and as bank shares continue to slide.

Vince Cable, the financial spokesman of the opposition Liberal Party, Tuesday criticized the FSA move as premature.

"When you have a fire raging, you don't start throwing paraffin around the place and making it worse, which is what is happening here," he said.


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