"The situation on the financial markets has improved so much in the past few months" that an extension of the short-selling ban, which expired on January 31, was not necessary, German stock market watchdog Bafin said in a statement.
In the mayhem that followed the collapse of US investment bank Lehman Brothers in September 2008, Bafin banned the short-selling of stock in 11 financial firms, including Deutsche Bank, Commerzbank and Allianz.
Short-selling was blamed at the time for putting additional pressure on the banks as they reeled from losses in the fallout from the US subprime home loan debacle.
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Bans in other countries including Britain have also been lifted.