MPS have called on the City watchdog to extend its ban on the short-selling of shares when it expires in two weeks’ time. John McFall, chairman of the Treasury Select Committee, said the situation had not improved sufficiently since the ban was first imposed.
Short-selling is when investors, typically hedge funds, borrow shares in a company which they then sell in the hope of buying them back later at a lower price.
The Financial Services Authority (FSA) introduced a temporary ban on the practice in September last year due to the financial turmoil in the markets. But the ban is due to expire on January 16, and the FSA has yet to say whether it plans to extend it.
Mr McFall said: ``They would have to have very good reasons for lifting it.”
