EU to crack down on abusive short selling
02 September 2010 Brussels
Image: Shutterstock
European Union regulators are set to bring in new laws that will ban the abusive short selling of shares and naked selling of credit default swaps and sovereign debt for three months or more.
The draft law is expected to be published on September 15.
Following the collapse of Lehman Brothers two years ago, a number of EU countries brought in temporary bans on naked short selling, and there have been calls for EU-wide regulation on the matter.
Greece in particular has criticised speculators for pushing it to the brink of default.
"The regulation aims at addressing the identified risks without unduly detracting from the benefits that short selling provides to the quality and efficiency of markets," said the draft law, which has been seen by Reuters.
The measure will cover all financial instruments and will give the new European Securities and Markets Authority, which will be in place from January, the powers to introduce emergency measures, such as three-month renewable bans.
The draft law is expected to be published on September 15.
Following the collapse of Lehman Brothers two years ago, a number of EU countries brought in temporary bans on naked short selling, and there have been calls for EU-wide regulation on the matter.
Greece in particular has criticised speculators for pushing it to the brink of default.
"The regulation aims at addressing the identified risks without unduly detracting from the benefits that short selling provides to the quality and efficiency of markets," said the draft law, which has been seen by Reuters.
The measure will cover all financial instruments and will give the new European Securities and Markets Authority, which will be in place from January, the powers to introduce emergency measures, such as three-month renewable bans.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
