POST TIME: 19 February, 2019 00:00 00 AM
Germany bans speculative attacks on Wirecard stock
AFP, Berlin

Germany bans speculative attacks on Wirecard stock

German and European financial market watchdogs ordered yesterday a ban on short-selling shares in payment processing firm Wirecard, sending the stock price soaring after a weeks-long rollercoaster ride over fraud allegations. In Bonn, market supervisor Bafin said in a statement that it issued a decree “forbidding the establishment of new net short-selling positions in Wirecard AG shares or to increase existing net short-selling positions” for two months.

Short-sellers borrow shares, sell them on the market and later buy them back. If the price of the shares has fallen, the difference in price is profit for the short-seller, making the practice in essence a bet on falling stock prices.

In a separate statement, the European Securities and Markets Authority (ESMA) said it “issued an official opinion agreeing to an emergency short-selling prohibition” on Wirecard shares.

The Munich-based firm’s stock market woes “are adverse events or developments which constitute a serious threat to market confidence in Germany,” the authority said, making the ban an “appropriate and proportionate” response.