EU Gets Tough On Short Selling

Oct 20 2011 | 9:59am ET

The EU will impose stricter regulations on the short selling of shares and bonds, banning “naked” credit default swaps on government bonds.

Agreement on the new rules was reached Tuesday between representatives of the European Parliament and EU member states. Proponents say they will make financial markets more stable.

The rules should get the final stamp of approval from the full EP and EU finance ministers within the next few weeks and take effect as of Nov. 1, 2012.

Lawmakers have tried to distinguish between investors using short-sales to hedge potential losses on shares, bonds or other assets and speculators trying to make a quick profit.

Representatives of the hedge fund industry are not happy with the new rules:

"We have previously expressed our concerns about the impact of a ban on uncovered sovereign CDS,” said Andrew Baker, CEO of the hedge fund lobby group, the Alternative Investment Management Association. "It could not only reduce liquidity and increase volatility in debt markets, but also increase government borrowing costs and reduce real economy investments in EU member states."


In Depth

Star Fund Managers Battered By Rocky Ride In Yields, Currencies

May 28 2015 | 6:05am ET

Some of the biggest names in the investment world have been whipsawed by the recent...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

The Road To Tax Alpha

May 28 2015 | 5:36am ET

Tax-related alerts are increasingly helping investment managers harvest tax alpha...

 

Sponsored Content

Editor's Note