FP, the first share investors will be able to short

The floatation of Fondul Proprietatea (Property Fund-FP), scheduled for tomorrow, brings a series of novelties on the Romanian capital market, besides global accounts, which will smooth foreign funds’ access to FP shares, with investors also due to have the possibility of operating short transactions.

In other words, they will be able to borrow shares from brokerages or even from other investors, for a fee, to sell them on the Stock Exchange, if they expect a share price decline, with the hope of being able to repurchase them at a lower price. Thus, investors will have the opportunity of gaining even by betting on a share drop, which is not currently possible with any other Romanian share listed on the Bucharest Stock Exchange.

Brokers have been asking for the introduction of global accounts and short selling at least for the most liquid shares on the Stock Exchange for a number of years now, as ways to boost liquidity and reduce volatility.

FP shares will also benefit from a market maker, namely a brokerage continuously offering purchase and sale quotations, so that investors on the BSE will have somebody to sell to or buy from at all times.