Saturday 24 June 2017

Don't lift ban until banks recapitalised, says Somers

Joe Brennan

IRISH Stock Exchange boss Deirdre Somers said yesterday that a year-and-a-half-long ban on 'short-selling' of Irish financial stocks should remain in place until the banks are recapitalised.

Short-selling is a strategy whereby investors can take a punt on stocks falling in value. However, regulatory authorities worldwide banned the practice in the case of financial shares in September 2008 -- when markets went into a tailspin after US investment bank Lehman Brothers collapsed

Ms Somers told an Oireachtas committee that while most markets had lifted the prohibition, the Irish market was "relatively unique as there continues to be a significant level of uncertainty regarding the final details of our banking recapitalisation".

Capital

The Government is expected to make a major announcement later this month on what capital the banks will need.

Ms Somers said the exchange would support replacing the ban with a regime where short positions were disclosed, in line with a growing European trend.

Asked about a controversial loophole that allows secret stake-building in Irish companies through contracts for difference (CFDs), Ms Somers said the exchange first raised its concerns with the Financial Regulator in late 2007. It had earlier emerged that the Quinn family had been actively trading in CFDs in Anglo Irish Bank.

Finance Minister Brian Lenihan was given legislative powers last year to go about closing the CFD loophole.

Irish Independent

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