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Severin, Christin


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Neue Zürcher Zeitung - Switzerland | 20/05/2010

Absurd ban on short selling

Germany's ban on naked short selling is mainly symbolic in character, the conservative daily Neue Zürcher Zeitung concludes: "The ban is absurd. Financial theory and empirical studies have demonstrated again and again that short selling is not detrimental. On the contrary, it raises liquidity and allows negative market opinion to be directly translated into action. It's not immoral. It's no more reprehensible to believe a stock is overvalued than to believe it's undervalued and speculate on a price gain. ... But even if you accept the logic of the ban, the decision seems technically flawed. In its unilateral form it remains mainly symbolic. For the ten stocks in question the main trading place may be Frankfurt, but loans and credit default insurances are mainly negotiated in New York and London, where German legislation has no influence."

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