The Relevance of Short Sales to the Maltese Stock Market

This paper outlines the main concepts behind short selling activities and explores their relevance to a smaller stock market in the context of Maltese securities. While short sales have desirable properties, especially with respect to pricing efficiency, formal and informal restrictions may hinder this function. Short sale activity may be particularly risky in the context of the Maltese market, due to its low liquidity level. Short sales on their own may not be sufficient to enhance liquidity levels on this market