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Pension fund managers back short-selling proposal

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NETHERLANDS - Large Dutch pension funds appear to be backing a proposal from the Dutch Financial Market Authority (AFM) to lift the ban on short-selling.

The Dutch regulator launched a consultation this week among market participants on the short-selling ban which was renewed January, and pension funds have until next Monday to share their views on the current regulations.

Under the latest proposal, the AFM will end the rule prohibiting any person from effecting a ‘short' sale but will instead require significant short positions only be communicated to the regulator each time they exceed a threshold of 0.1%.

More importantly, IPE has found the intended measure is unlikely to see opposition from pension funds since the effectiveness of the ban has been uncertain, as several academic studies have suggested.

A spokesman for PFZW, the Netherlands' second-largest pension fund said "the fact that the pension fund temporarily stopped lending securities had nothing to do with the negative effects of short-selling…but resulted from an assessment of the operational risks involved and the expected low returns".

Similarly, officials at APG, which manages the ABP pension fund assets on behalf of its owner, said they share the views of Eumedion, the Dutch corporate governance forum for institutional investors, which last month recommended European governments and supervisors end the remaining short-selling bans.

APG also stopped securities lending last autumn and "will continue do so if needed for risk management purposes", according to a spokesman.

And Mn Services has agreed with the plan to remove the prohibition on short-selling, with a spokesman noting: "It will not lead to any change in our investment strategy", and added the asset manager would welcome the disclosure of substantial short positions.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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