UPDATE 1-Greece seeks to curb bets against its debt

(Adds details)

By Emelia Sithole-Matarise and Dina Kyriakidou

LONDON/ATHENS, April 8 (BestGrowthStock) – Greece on Thursday
sought to make it harder to bet against its government debt by
introducing daily repurchase auctions to cover short
positions.

Greek trading system HDAT, which is run by the central
bank, told primary dealers of Greek sovereign debt the move was
a response to the scale of open short positions on such bonds,
according to a copy of the HDAT document obtained by Reuters.

This week financial markets hammered Greek bonds and bank
shares, driving the euro zone member’s borrowing costs higher
and pushing it closer to tapping a last-resort European
Union-International Monetary Fund safety net.

“Due to massive debit position in HDAT transactions, the
Committee of Primary Dealers Supervision and Control decided as
of today and until further notice to automatically proceed to
repo auctions, at the end of HDAT trading day, in order to
cover all transactions with such debit positions,” the
statement obtained by Reuters said.

Traders said the decision meant that any uncovered short
positions on Greek government bonds would have to be covered,
regardless of the price, at the end of the settlement day in
the repo auction.

This would make it more difficult to short Greek bonds but
might end up affecting market makers more than others,
according to some traders.

“It will not kill off liquidity, but it will raise costs a
bit,” a source at a primary dealer said.

The volume of Greek government debt traded on the HDAT
electronic system fell 10.4 percent month-on-month in February
to 18.9 billion euros ($25.16 billion), according to the latest
data from the Greek central bank.

Year-over-year, trading volume rose 35.9 percent in
February. Daily average turnover in February fell to 0.99
billion euros from 1.1 billion in January.

Greece’s borrowing costs have surged as markets worried
about the country’s soaring deficit, its debt load and its
ability to rollover debt.

The cost of insuring Greek debt against default is at its
highest since the launch of the euro in 1999, and the Greek
10-year government bond yield has leaped to offer the biggest
premium over benchmark German Bunds ever seen since then.

The list of primary dealers includes Greek banks as well as
non-Greek ones, including Barclays Bank, BNP Paribas, Unicredit
Bank, Citigroup Global Markets, Credit Suisse Securities
(Europe), Deutsche Bank and Goldman Sachs, according to the
HDAT website.

Stock Market News

(Editing by Padraic Cassidy)

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UPDATE 1-Greece seeks to curb bets against its debt