BaFin bans net short positions in shares of Wirecard

German financial regulator BaFin has issued a general administrative act prohibiting the establishment of net short positions in shares of Wirecard.

The ban, which is effective immediately, also stops the increases in existing net short positions.

In response to this decision, the European Securities and Markets Authority (ESMA) has issued an official agreement to this ban, for a two-month period. This action is being made under the short selling regulation.

For the next two months, no transactions of any Wirecard shares, either directly or through related instruments, will be allowed. This is irrespective of the venue or market where the transactions are being made.

This measure does not apply to market-making activities, trading in index-related instruments or short positions entered into hedge positions on convertible bond or subscription rights, ESMA stated.

Wirecard has seen its share price fall from €167 down to €99.90 in just two weeks, reducing market cap by 40 per cent. This is likely due to reports regarding alleged fraud committed by a number of employees in Wirecard subsidiaries in Singapore.

BaFin has justified this decision on the back of ‘adverse situation or circumstances that constitute a serious threat to market confidence in appropriate price determination in Germany.’

This viewpoint was shared by the ESMA, which stated events and developments are a serious threat to market confidence in Germany.

Wirecard is a payments processor which enables businesses to accept online, offline and mobile payments. Its offerings accept various payment types as well as protecting organisations from fraudulent attacks.

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