Ban On Short Selling - Will it Help

With markets in free fall, regulators have sought to intervene and restore calm. One thing they have done is ban the practise of short selling - selling shares you don't own to try and profit from falling prices. Short selling explained

The FSA has temporarily banned short selling in major UK banking and insurance companies. It is hoped this will reduce the downward pressure on share prices and prevent shares like HBOS coming under extreme fire.

However, the ban on short selling does not address the fundamental problem of the credit crunch - which is a shortage of funds, bad debts and illiquidity in the banking sector. However, it may help reduce the volatility of markets.