Why does not the U.S.? Countries that ban short selling: I think some countries still ban short selling. From Investment News in 2011;
France, Spain, Italy and Belgium imposed bans on short-selling to stabilize markets after European banks including Societe Generale SA hit their lowest level since the credit crisis.
“While short-selling can be a valid trading strategy, when used in combination with spreading false market rumors this is clearly abusive,” the European Securities and Markets Authority, which coordinates the work of national regulators in the 27-nation European Union, said in a statement after talks ended late yesterday. National regulators will impose the bans “to restrict the benefits that can be achieved from spreading false rumors or to achieve a regulatory level playing field.”
The watchdogs are trying to stem a rout that sent European bank stocks to their lowest in almost 2 1/2 years and quell concern that European lenders may be struggling to fund themselves. Banks’ overnight borrowings from the European Central Bank jumped to the highest in three months yesterday, a sign some lenders may have need for emergency cash. Regulators imposed similar limits on short sales in September 2008 following the collapse of Lehman Brothers Holdings Inc.
The move “shows a sense of panic among European regulators,” Giri Cherukuri, head trader for Oakbrook Investments, which manages $2.7 billion, said in a telephone interview. “On the other hand, people have been calling for regulators to do something decisive, and this is one step along that way.”