News from Cass Business School

Should short-selling be banned?

Study suggests short-selling is not the villain some regulators make out

During the financial crisis in 2008, the Financial Services Authority (FSA) blamed short-selling for causing meltdown in the markets and banned it. But research conducted by Dr Richard Payne, Reader in Finance, suggests the practice, which involves selling borrowed shares in the hope of buying them back later at a lower piece, is not the villain that some regulators make out.

In this week's Cass Talks, Dr Payne insists the short-selling ban imposed by the FSA from 2008 to 2009 significantly impaired the quality of UK equity markets and, far from being stabilising, the ban dramatically reduced liquidity and worsened problems of volatility in the prices of UK financial stocks. "The picture that many CEOs would like you to believe about short-sellers is not necessarily accurate. Short-sellers are performing a valuable service in the markets, providing liquidity and making sure prices are right, instead of manipulating prices downwards," he said.

Listen to Dr Payne in this week's Cass Talks. These interviews are an opportunity to hear Cass faculty and prominent alumni give their perspective on current business and finance news stories, global issues affecting the business world and new research coming out of the School. Listen, watch and download Cass Talks and see other Cass academics share their opinions at:

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