The International Securities Lending Association, the Alternative Investment Management Association and the London Investment Banking Association jointly commissioned independent research to examine daily returns on UK, US, Italian, French and German shares before and after the introduction of the short selling restrictions, including shares subject to and unaffected by the ban.
Findings highlighted no strong evidence that restrictions on short selling changed the behaviour of stock returns. Stocks subject to the restrictions behaved very similarly both to how they behaved before their imposition and to how stocks not subject to the restrictions behaved.
The authors also found no sign of any detrimental impact of the constraints in terms of reduced efficiency of pricing.
Regression analysis suggested that changes in stock returns were driven mainly by other factors affecting the financial sector as a whole rather than the restrictions on short selling.
On the basis of this research, the associations see no case for continued bans on short selling as there is no strong evidence that these have been effective in reducing share price volatility or limiting share price falls.