EU watchdog tightens short-selling rules as coronavirus hits shares

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© Reuters. EU watchdog tightens short-selling rules as coronavirus hits shares© Reuters. EU watchdog tightens short-selling rules as coronavirus hits shares

LONDON (Reuters) – The European Union’s markets watchdog tightened rules for short-sellers on Monday in an attempt to calm stock indexes that sank again over fears that the coronavirus epidemic will tip economies into recession.

The European Securities and Markets Authority (ESMA) said it has lowered the threshold for reporting short-selling to regulators.

“ESMA considers that lowering the reporting threshold is a precautionary action that, under the exceptional circumstances linked to the ongoing COVID-19 pandemic, is essential for authorities to monitor developments in markets,” ESMA said in a statement.

“The measure can support more stringent action if required to ensure the orderly functioning of EU markets, financial stability and investor protection.”

Short-selling refers to investors like hedge funds who bet on making a profit from the price of a stock or bond they have borrowed, going down.

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