Factbox: Banker, analyst reaction to German short selling ban
Thu May 20, 2010 7:20am EDT
(Reuters) – Germany declared war on speculators, stunning investors with a ban on naked short selling of certain financial instruments and wrongfooting its European partners who said they were not consulted.
France said it would not follow suit and the European Commission pleaded for a coordinated approach. Chancellor Angela Merkel put the euro under more pressure by declaring it was in danger.
Following are a selection of views from industry figures and analysts:
FRANK GERSTENSCHLAEGER, DEUTSCHE BOERSE BOARD MEMBER
“The ban came as a surprise, also the fact that it came without any warning. The solo effort within Europe is confusing.”
CLEMENS BOERSIG, DEUTSCHE BANK SUPERVISORY BOARD MEMBER
“The fact that we are dealing with many regulatory systems makes life difficult. The aim is to have a level playing field in Europe, we don’t have this and this leads to regulatory arbitrage. Aim is to not have national solo efforts.”
RANDY WILLIAMS, VICE PRESIDENT, GLOBAL COMMS, BATS
(ALTERNATIVE TRADING VENUE)
“We’re seeing lower volumes in the affected stocks today and expect all venues to be affected similarly, particularly given the lack of clarity of the short sale ban.”
COMMERZBANK CHIEF EXECUTIVE MARTIN BLESSING
Said there was a clear need to regulate short selling and credit default swaps. “Besides the ban on naked short selling, I am thinking particularly of credit default swaps,” he said.
Such financial instruments can serve as a warning light.
“On the other hand, they also unnecessarily aggravated the situation, and even increased the risk of a default.”
ANTHONY BELCHAMBERS, CHIEF EXECUTIVE OF FUTURES AND OPTIONS
“This is going to result in hopeless confusion in the financial services sector. It makes the whole role of market functionality and compliance difficult to fulfill.”
SIMON TILFORD, CHIEF ECONOMIST, Center FOR EUROPEAN REFORM,
“It again suggests that the Germans are no closer to understanding that the markets are not the problem here. The markets are right to be uncertain about the sustainability of the euro zone in its current form.
“What is specific to Germany is a readiness to make unilateral announcements on things that would only be doable if they were done collectively.
“It’s pretty populist stuff. It’s very difficult to imagine the French doing something like this, making this sort of unilateral decision.”
STEPHEN JEN OF BLUEGOLD HEDGE FUND
“Rather strangely, Eurocrats have a ‘barbarians-at-the-gate’ view of what is going on, that the EMU citadel is under siege and all resources are needed to repel the antagonists/atheists whose cruelness is only matched by their ignorance.
“I think this view is close to 100 percent off the mark. If anything … the biggest sellers of European bonds are European pension funds, not U.S. hedge funds.”
JEREMY STRETCH, CURRENCY STRATEGIST RABOBANK
“Politicians have failed to appreciate that careless talk costs the performance of the single currency.”
BOB POZEN, CHAIRMAN OF MFS INVESTMENT MANAGEMENT
“These are understandable reactions by the government but they are unfortunate and ineffective … It’s a very blunt instrument that doesn’t make any sense.”
MARK CHANDLER, GLOBAL HEAD OF FX STRATEGY, BROWN BROTHERS
“Market participants concluded that the move was ill-thought out, uncoordinated, and likely ineffective.
“This would seem to be yet another case of a European government taking the wrong fork in the road.”
STUART BENNETT, CURRENCY STRATEGIST AT CREDIT AGRICOLE
“The German announcement came out of the blue, without warning, and there is major uncertainty about what this means, whether others will follow and how they will maintain this.
“The backdrop is a very neurotic market which is inclined to give any euro-related news a negative spin.”