The other day, upon receiving notice of limitations being imposed by clearing firms on the short sale of European stock indices futures in the wake of the short sale ban imposed by Italy, Spain, France and Belgium, we began to investigate the potential consequences for futures traders.

Well, just a few days later, we have a clue.  Not in the form of an edict or email, but via the story told by numbers. As we expected, and Zerohedge predicted – the ban hasn’t helped stem the selloff in European banks or the European stock indices one bit.

Euro Stock Indexes:

So what about futures contracts on these indices? Are they just frozen, hanging out in limbo while the world figures everything out?  Not so much… While Newedge and MF Global may have been nervous about the ban and potential consequences, the rest of the players (and likely their clients as well) appear to be ignoring any such restrictions on short selling – with volume on the Euro Stoxx futures contract topping 1.6 million in volume so far today (that means 1.6 million contracts have been bought AND SOLD – in futures, there is a seller for every buyer and vice versa).