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(From Polish News Bulletin)
Polish capital market has made today another step on its way to become more attractive to investors. A short selling, which is available on the Warsaw Stock Exchange as of today, has been awaited not only by equity investors but also by forex brokerages that hope the new mechanism will make their offer more diversified.
With the currently negative sentiment on stock markets, investors can now start making profits on share declines, which used to be impossible in the past. Poland started mulling the implementation of such a mechanism more than a year ago, when the crisis on financial markets was over. The Warsaw Stock Exchange Chief Executive Officer Ludwik Sobolewski argued that it could boost liquidity and help recover from the crisis faster. While some countries of the European Union banned the controversial short-selling practice, Poland has allowed going short in trading on 36 stocks and 40 Treasury bonds. Formally, short-selling transactions were allowed on the Polish market as of 1996 but due complex legal regulations they were conducted very rarely. - BEARISH STANCE
The Financial Supervisory Commission (KNF) approved on April 19 the changes in trading rules at the Warsaw Stock Exchange (GPW) and the National Depository for Securities (KDPW), which allow for short-selling transactions in new formula. Both institutions have been equipped with instruments for mitigating excessive risks and offer opportunities for expanding this segment of the stock market, the KNF said.
Short-selling shouldn't be associated with short-term investment and immediate share - or any other security - sales. It's more similar to investment into options or future contracts. Shorting and going short also refer to entering into any derivative or other contract under which the investor profits from a fall in the value asset.
Short selling is the opposite of "going long". A short seller takes a negative, or "bearish," stance, believing that the price of a security will fall. Investors who employ short selling often use it to allow them to profit on trading in securities which they believe are overvalued, just as …