Local MP Katy Clark is calling for the ban on short selling to be reinstated after the Financial Services Authority lifted the ban without giving the Government significant notice.
The timing of the ban being lifted coincided with the shares in high street banks crashing, with Barclays losing a quarter of its stock market value in just one day.
Katy said, “Lifting the ban on short selling in this economic climate creates a problem. With the financial system currently fragile we need stability rather than allowing it to be legal for speculators to effectively place bets on shares falling.”
“I believe it is no coincidence that the British Banking system took a massive hit just as the ban was lifted. It is my understanding that one London’s most successful hedge funds made £12m in four days after betting on Barclays share price falling. Profiting in such a manner from others losses is ethically wrong.”
Katy continued, “The economic downturn is a global issue and many other countries have placed a ban on short selling. Just as our ban on short selling was lifted the Australians extended their ban and it had the opposite effect with their banks showing an upturn in fortunes.”
Ms Clark added, “Whilst people are losing their jobs we need to work together to get through this economic downturn. Those who are short selling are aiming to profit from the economic difficulties we currently face. The Financial Services Authority stated when they lifted the ban that it can be reinstated and I urge them to do so for the stability of our economy.”