Legality of Short-Selling Bans on EU Trading Venues

This paper examines the legality of short-selling bans on trading venues within the European Union. It analyses the regulatory framework governing short selling under the Regulation (EU) No 236/2012 and the powers of national competent authorities to impose temporary restrictions or prohibitions on short selling during periods of market stress. Particular attention is given to the conditions under which such measures may be adopted, including requirements of necessity, proportionality and market stability.

The paper discusses how short-selling bans interact with the functioning of modern securities markets, especially in relation to liquidity provision, price discovery and market-making activities. It also considers the role of EU supervisory coordination, including the involvement of European Securities and Markets Authority, in ensuring a consistent application of emergency measures across Member States.

By analysing the legal basis and practical implications of trading restrictions, the study highlights the tension between regulatory intervention aimed at stabilising markets and the fundamental market functions served by short selling. The paper concludes with observations on the limits of supervisory discretion and the broader implications of short-selling bans for the integrity and efficiency of EU capital markets.

Short-Selling Bans in the European Union – Legal Analysis (PDF)

BLJ 01-26 Müller-Lankow Legality of Short-Selling Bans on EU Trading Venues.pdf

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