EU wants tougher short selling rules
03 December 2010 Brussels
Image: Shutterstock
The European Union has published a draft law that is set to clamp down further on short selling and credit default swaps.
EU policymakers say CDS contracts based on sovereign debt were used by hedge funds to bet on a fall in the price of government bonds, which worsened the Greek debt crisis.
This claim has been denied by the hedge funds, who say the CDS market in Europe is too small to have a material impact on the sovereign debt market.
Some countries have vehemently opposed the new legislation, saying the rules are too tough and will detrimentally affect government debt markets.
EU policymakers say CDS contracts based on sovereign debt were used by hedge funds to bet on a fall in the price of government bonds, which worsened the Greek debt crisis.
This claim has been denied by the hedge funds, who say the CDS market in Europe is too small to have a material impact on the sovereign debt market.
Some countries have vehemently opposed the new legislation, saying the rules are too tough and will detrimentally affect government debt markets.
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