Regulatory Alerts2022-10-19
AFM Market Watch 6: Short Selling Ban Impact Study
The Netherlands Authority for the Financial Markets (AFM) conducted a joint study with the French AMF to evaluate the impact of the short selling ban imposed in France during the 2020 pandemic. The analysis concludes that the restrictions failed to improve market microstructure or quality and instead negatively impacted market efficiency by reducing liquidity and increasing transaction costs. Consequently, the AFM maintains that short selling bans should not be imposed lightly and advocates for enhanced European cooperation and real-time monitoring to support future regulatory decisions.
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