Hedge fund industry is on standby to help authorities save City of London’s status

Over the past two weeks regulators across markets around the world have imposed a variety of restrictions on short selling of financial stocks. The UK authorities have imposed the longest ban of any regime in the world.

Since the ban, at least seven major banks have had to be rescued. The deterioration in their share price in that period cannot have been the result of short selling.

Volatility in the financial sector has risen and liquidity has fallen. The bid-offer spread on financial shares has risen sharply, increasing transaction costs and adding to the cost of capital.