Short Selling Bans Explained: US, Germany, EU

Is short selling banned? No. As of September 2026, short selling is legal in the United States, in Germany and across the EU for any investor whose broker can lend the shares. It has been banned before: the SEC stopped it in 799 financial stocks for three weeks in 2008, BaFin outlawed naked shorts in ten German financials in 2010, six EU regulators banned it market-wide in the spring of 2020, and South Korea shut it off in every listed stock for nearly seventeen months. Two standing circuit breakers, SEC Rule 201 and Article 23 of the EU Short Selling Regulation, can still switch it off in a single stock for a day or two.

Is short selling banned in the US or Germany today?

A covered short sale, with the shares borrowed or at least located before the order goes in, is legal in every major market today; the mechanics are in how to short a stock, step by step.

What both jurisdictions restrict is the naked or uncovered short sale (in German, the ungedeckter Leerverkauf): selling shares nobody has borrowed or located. In the US, Rule 203(b)(1) of Regulation SHO has required a locate before any short sale since January 2005. In the EU, Article 12 of Regulation (EU) No 236/2012, the Short Selling Regulation, has required a borrow or a locate in every member state since 1 November 2012, and § 30h of the German Securities Trading Act (WpHG) has prohibited uncovered short sales in German-listed shares since 27 July 2010. So "Leerverkauf verboten?" has a two-part answer: covered shorts are allowed, naked shorts are prohibited by statute. What the borrow costs is covered in hard-to-borrow lists and borrow fees.

When has short selling been banned? Every real ban, dated to its order

Each row is pinned to the order or decree that set it; length is calendar days including both end dates, and the notes underneath name the instrument.

WITH bans AS
(
    SELECT 'United States (SEC)' AS jurisdiction, 'Emergency Order, Release 34-58592' AS instrument, '2008-09-19' AS in_force_from, '2008-10-08' AS in_force_to
    UNION ALL
    SELECT 'Germany (BaFin)', 'General decrees of 18 May 2010', '2010-05-19', '2011-03-31'
    UNION ALL
    SELECT 'Spain (CNMV)', 'SSR Article 20', '2020-03-17', '2020-05-18'
    UNION ALL
    SELECT 'Italy (CONSOB)', 'SSR Article 20', '2020-03-18', '2020-05-18'
    UNION ALL
    SELECT 'France (AMF)', 'SSR Article 20', '2020-03-18', '2020-05-18'
    UNION ALL
    SELECT 'Belgium (FSMA)', 'SSR Article 20', '2020-03-18', '2020-05-18'
    UNION ALL
    SELECT 'Austria (FMA)', 'SSR Article 20', '2020-03-18', '2020-05-18'
    UNION ALL
    SELECT 'Greece (HCMC)', 'SSR Article 20', '2020-03-18', '2020-05-18'
    UNION ALL
    SELECT 'South Korea (FSC)', 'FSC decision of 5 November 2023', '2023-11-06', '2025-03-30'
)
SELECT
    jurisdiction,
    instrument,
    in_force_from,
    in_force_to,
    dateDiff('day', toDate(in_force_from), toDate(in_force_to)) + 1 AS calendar_days
FROM bans
ORDER BY toDate(in_force_from), jurisdiction

• United States. SEC Emergency Order, Release No. 34-58592, issued 18 September 2008 and effective 12:01 a.m. EDT on 19 September, barred short sales in the 799 financial firms in its Appendix A, with a carve-out for bona fide market making. Release 34-58723 of 2 October extended it to three business days after the Emergency Economic Stabilization Act was signed; the Act was signed on 3 October and the order expired at 11:59 p.m. ET on 8 October 2008.
• Germany. Three BaFin general decrees (Allgemeinverfügungen) of 18 May 2010, effective 00:00 on 19 May 2010 and running to 24:00 on 31 March 2011. They prohibited naked short sales in ten financial shares (Aareal Bank, Allianz, Commerzbank, Deutsche Bank, Deutsche Börse, Deutsche Postbank, Generali Deutschland, Hannover Rück, MLP and Münchener Rück), plus naked shorts of eurozone government bonds and uncovered sovereign credit default swaps. Covered short selling of the ten stocks stayed legal throughout; from 27 July 2010 the statutory ban in § 30h WpHG covered all German-listed shares.
• Six EU markets. Spain's CNMV banned transactions that create or increase a net short position in Spanish shares from 17 March 2020. On 18 March Italy's CONSOB, France's AMF, Belgium's FSMA, Austria's FMA and Greece's HCMC followed with market-wide bans under Article 20 of the Short Selling Regulation. On 18 May 2020 all six announced their bans would end at 11:59 p.m. that night, Italy a month before its three-month term ran out.
• South Korea. The Financial Services Commission banned short sales of all listed stocks from 6 November 2023, first through 30 June 2024, then to 30 March 2025 while it built a central system to detect naked short sales; short selling resumed on every Korea Exchange stock on 31 March 2025.

What is the SEC's short sale circuit breaker (Rule 201)?

Rule 201 of Regulation SHO, the alternative uptick rule, is the standing US mechanism (adopted 24 February 2010, effective 10 May 2010, compliance required from 28 February 2011). It trips for any covered security on a day its price falls 10% or more from the prior day's close; from then on a short sale order in that stock may not be executed or displayed at or below the current national best bid, for the rest of that trading day and the whole of the next.

Rule 201 is a price test rather than a ban, and a different mechanism from the limit-up-limit-down halts that pause all trading, long and short, explained in why stocks halt: limit up, limit down.

How does the EU restrict short selling after a big drop?

Regulation (EU) No 236/2012 gives every national regulator two tools. Article 23 is the one-day version: where a share's price on a trading venue falls significantly in a single day against the previous close, the venue's home regulator must consider restricting or prohibiting short selling in that share until the end of the following trading day, extendable by up to two further trading days if the share has fallen again by at least half the threshold by then.

"Significant" has a number: Article 23(5) sets it at a fall of 10% or more for a liquid share, and Article 23 of Commission Delegated Regulation (EU) No 918/2012 fills in the rest, 10% for a share in the main national index with a listed derivative, 20% for other shares priced at EUR 0.50 or more, and 40% for everything else.

Article 20 is the emergency version the six regulators used in March 2020. Where adverse developments pose a serious threat to financial stability or market confidence, a regulator may prohibit short sales, and transactions with the same economic effect, in one instrument or across the whole market. Under Article 24 a measure lasts up to three months and can be renewed in three-month steps.

Why the Bundesanzeiger short position lists exist

The same regulation is what lets a German reader look up who is short a DAX stock. Article 5 requires anyone with a net short position of 0.1% or more of a company's issued share capital to notify the national regulator, and again at each further 0.1% (the 2012 text said 0.2%; Commission Delegated Regulation (EU) 2022/27 set 0.1% from 31 January 2022). Article 6 draws a higher line: at 0.5% and each 0.1% above, the position is made public, by 15:30 on the following trading day under Article 9. BaFin publishes those positions in the Bundesanzeiger; the lookup is walked through in how to find short positions in German stocks. The US publishes aggregate short interest rather than named holders, ranked in the most shorted stocks.

What happened to spreads and volumes during the 2020 bans?

ESMA's own evaluation of the March to May 2020 bans is Working Paper No. 1, 2024 (ESMA50-524821-3002, dated 11 January 2024), by Alessandro Spolaore and Caroline Le Moign. It compares banned shares with matched shares in EU countries that stayed open. The headline result:

Consistent with prior theoretical and empirical work, the 2020 short selling bans are associated with a liquidity deterioration, measured by significantly higher bid-ask spreads (+8% for stocks in banned jurisdictions during the restriction, compared to the control group) and Amihud illiquidity values (+5.8%). The bans also had the effect of decreasing the volumes traded (-14.9%), as well as the volatility of the shares traded under the bans (-8.4%). Effects on abnormal returns do not appear significant.
ESMA Working Paper No. 1, 2024, "Market impacts of the 2020 short selling bans", 11 January 2024

The panel sets those four estimates side by side; they are ESMA's published figures, not a fresh measurement.

SELECT
    measure,
    published_effect_pct
FROM
(
    SELECT 'Bid-ask spread' AS measure, 8.0 AS published_effect_pct, 1 AS display_order
    UNION ALL
    SELECT 'Amihud illiquidity', 5.8, 2
    UNION ALL
    SELECT 'Volume traded', -14.9, 3
    UNION ALL
    SELECT 'Volatility', -8.4, 4
)
ORDER BY display_order

The abstract adds two findings a reader might not expect: no evidence that the bans either supported or harmed the prices of banned shares, and a liquidity deterioration that persisted after the bans were lifted.

FAQ

Is short selling illegal in Germany?

No. Covered short selling is legal. Naked short selling of German-listed shares has been prohibited since 27 July 2010 (§ 30h WpHG) and EU-wide since 1 November 2012 (Article 12 of Regulation 236/2012).

What is the SEC's alternative uptick rule?

Rule 201 of Regulation SHO. After a listed stock falls 10% or more from its previous close, short sale orders in it may not execute at or below the national best bid for the rest of that day and all of the next.

How long did the 2008 short selling ban last?

From 12:01 a.m. EDT on 19 September 2008 to 11:59 p.m. EDT on 8 October 2008, fourteen trading days, under SEC Release No. 34-58592 as extended by Release 34-58723.

Every date above traces to a published order or regulation. To see how a stock's short interest and borrow cost moved through any of these windows, ask in plain English on the Strasmore terminal.