Consob assess moves on short selling

MILAN: Italy market regulator Consob may discuss requiring more disclosure on short-selling in a meeting on Sunday, a source close to the matter said, after a sell-off hit domestic banking shares and government bonds on Friday.

Markets are worried the euro zone debt crisis could reach Italy. A very high public debt and anaemic growth rates, coupled with domestic political tensions, make the country vulnerable to speculative trades.

"The commission will meet to sum up the situation ahead of markets reopening on Monday," the source said adding the condition of markets was "exceptional".

Consob said on Friday it was closely monitoring the situation with particular attention to the price fall of stocks such as Italian bank Unfired and insurer Fondiaria-SAI.

The source said Consob could look at possible measures such as asking for "more transparency" on short-selling, while it continues to monitor markets.

"Consob may take under consideration rules existing in other countries where investors must inform authorities of their short-selling positions when they are above certain levels," the source said.

The cost of Italian government debt soared on Friday and financial stocks fell due to worries a higher cost of funding for Italian banks would dent their profits.

Shares in UniCredit, Italy's biggest bank by assets, lost 20 percent last week with a 7.9 percent drop on Friday alone.

European Union lawmakers are trying to find an accord to introduce curbs on short-sellers, who typically borrow securities and sell them on, expecting to buy them back later at a lower price to repay the lender and pocket the difference.

Copyright Reuters, 2010