Germany Moves to Ban Naked Short-Selling (XLF, DB)

In a move to counter the volatility hitting European markets in recent weeks, the German market regulator has announced a ban on naked short-selling of eurozone government debt and shares of major financial companies. BaFin, the German regulator, stated that the ban will take effect at midnight and last until March 31 next year. They blamed rampant speculation against eurozone governments and framed the move as a way to prevent such speculation from toppling the financial markets. BaFin pointed to Greece's recent experience, where credit default swaps betting that they would default on their debt forced the Greek government to seek a bailout. This move applies to several publicly traded banks, including Aareal Bank AG, Commerzbank AG, Deutsche Bank AG DB and Deutsche Postbank AG. It also applies to insurer Allianz SE AZSEY; reinsurers Hannover Re AG and Munich Re AG; Generali Deutschland Holding AG GDEUF, MLP AG, and Frankfurt stock exchange operator Deutsche Boerse AG. It could also affect ETFs that track financial companies, like the Financial Select Sector SPDR XLF.