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Short selling ban to end next week

The controversial short selling ban which was instigated by the UK government to try and protect troubled sectors such as the banking industry will end this week. While initially many do not expect the same degree of volatility which we saw earlier in the year there is concern that as we have "bailout part two" at the ready we may see more pressure on banking and retail shares.

Even now, prior to the original ban ending, there is speculation that the UK government will introduce a new ban to try and calm UK stock markets in what could be a very volatile 12 months ahead. As we have covered in the past, short selling is the practice whereby investors sell shares which they do not own in the hope of pushing the share price lower and buying the shares back at a lower level to crystallise a profit for themselves. While this practice in itself is perfectly legal there have been suggestions that some traders introduce incorrect rumours and information into the markets to push shares lower after they have sold at a higher level.

It will be interesting to see how the UK market reacts to the end of the short selling ban and what impact this has on some of the more troubled areas of the UK economy.

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