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| - Bans in some European countries on short-selling have revived debate about the merits of a trading practice that has fuelled virus-driven market crashes of late. Temporary bans by France and other nations on betting against company shares reprised steps taken in the 2008 financial crisis. The Financial Markets Authority (AMF) in France said that "an urgent step" was needed as markets worldwide are pummelled by sell orders caused by the COVID-19 pandemic. But US officials have rejected broader calls for total shutdowns of markets, and in the meantime automatic circuit-breakers have routinely kicked in to enforce temporary stops on plunging markets. Short-selling is when speculators borrow a stock from a broker to sell it, in expectation of the price falling. If the price does go down, the investor can buy back the stock at the lower price, return it to the broker and pocket the profit. The risk is that the price goes up rather than down, in which case the investor faces hefty losses. But of late, markets have been a sea of red. Tesla chief Elon Musk once called short sellers "jerks who want us to die". But defenders say the practice enhances market liquidity and shines scrutiny on companies. Extending an initial one-day halt on selected stocks, the AMF late Tuesday banned all short-selling on the Paris bourse until April 16. Italy, which is suffering the most in Europe from the outbreak, has gone further with a three-month ban. Spain and Belgium have one-month interdictions in place. No such bans seem to be coming yet in Britain or the United States, although regulators did ban a particular kind of short-selling called "naked" trading for a time in 2008. Treasury Secretary Steven Mnuchin has ruled out a temporary closure of freefalling US stock markets, akin to the shutdown enforced after the 9/11 attacks in 2001. "We absolutely believe in keeping the markets open," he said on Tuesday at the White House. "Americans need to know they have access to their money." Some market-watchers believe closures are necessary with no end in sight to either the pandemic or investors' panic mode. But Quincy Krosby, chief market strategist for Prudential Financial, said markets need to find their own equilibrium, "as difficult and painful as it is". However, she called for another look by regulators at high-frequency trading and computer algorithms, which now dominate daily market volumes. jit/rl
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