A powerful UK parliamentary committee has taken the unusual step of issuing an open letter to the chief of the country's market watchdog- the first since the banking crisis erupted- urging it to re-examine the short-selling ban on financial stocks. Since the ban expired last week there has been a decrease in the short positions in many UK banks.

In an open letter to Financial Services Authority chief executive Hector Sants, John McFall, chairman of the UK Treasury Select Committee, said: "In the light of the extreme market turbulence in bank shares in the week since the ban was lifted, could you please confirm that the FSA is actively monitoring the connection between the volatility in bank shares and the repeal of the bank in short selling."