ATHENS, Sept 1 (Reuters) - Greece lifted a short-selling ban on equity derivatives on Tuesday, but extended the restriction on underlying shares for a month until the end of September, saying market conditions had improved but had not yet fully returned to normal.
The short-selling ban went into effect when Athens imposed capital controls on June 29 and had been extended until the end of August. A regulatory source had told Reuters on Monday the securities watchdog was considering lifting the ban.
"There is a partial lift, just for derivatives but not for the underlying stocks," said Xenophon Avlonitis, a vice-president at the Capital Market Commission, the country's securities regulator.
"The board considered that market conditions have not yet fully normalised and that there is still significant volatility. But we can always lift the ban before it expires," Avlonitis said, adding the move had the approval of the European Securities Markets Authority (ESMA).
The regulator's decision removes a restriction that prevented traders from short-selling derivatives, such as futures and options, on individual stocks and indexes on the Athens exchange.
Short-selling involves investors borrowing shares to sell in the hope of being able to buy them back later a lower price.
Trading on the Athens bourse was suspended in late June for five weeks as part of the capital controls imposed to stem a debilitating outflow of deposits that threatened Greek banks. (Reporting by George Georgiopoulos; Editing by Matthias Williams and David Holmes)