The Athens Stock Exchange is trying to make life more difficult for those evil speculators who roam global markets looking for innocent countries and companies to ruin.
It has increased the stock lending interest rate from 2.5 per cent to 5.5 per cent and adjusted margin requirements — all because of “increased price volatility”.
Yeah right! (And Greece will succeed in cutting its budget deficit by 4 percentage points a year by 2012).
The statement from the Hellenic Exchanges:
Hellenic Exchanges (HELEX) have decided the following adjustments in the lending interest rates and the margin requirements that apply in the organized stock lending market:
Stock Lending Interest Rates
The main stock lending interest rate (Stock Repo – SL and Stock Reverse Repo – SB) will be increased from 2.50% to 5.50%. This modification will go into effect starting on Thursday 11.2.2010 and will concern the new lending contracts that will be traded from that date forward.Margin Requirements
The margin requirements for all stock lending products (Stock Reverse Repo and Long RA), will be gradually adjusted, given the increased price volatility.
The adjustment will be gradual, over a three week period, in order to provide the market with adequate time to adjust, as follows:* starting on 16.2.2010 to 130%
* starting on 22.2.2010 to 140%
* starting on 1.3.2010 to 150%
And here are the detailed interest rates and margin requirements.
Click for clarity:
Greek banks, of course, have been punitively expensive — and embarrassingly public — to short-sell for some time now. Some of the big banks have even woven together Deutsche Boerse-listed baskets of Greek banks (40 per cent Piraeus, 30 percent EFG, 20 per cent Alpha, 10 percent NBG, for example) to bypass the problem.
Those owning the basket could be long or short of the underlying banks without having to reveal their identity to the Greek authorities. Presumably today’s moves make it more difficult to the investment banks to hedge these baskets positions.
Attention now turns to the CDS market.
How long before regulators insist protection buyers own the underlying bond?
Related link:
Alert over short-selling disclosure rules – FT
The euro’s WMD danger to hedge fund “especuladores” – Ft-dot-comment
Nowotny talks contagion, exit strategies and all things peripheral – FT Alphaville interview