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

Q&A: MackeyRMS's Chris Mackey On A High Tech Fix To Broker Votes

Jun 23 2017 | 8:17pm ET

The looming implementation of the EU’s MiFID II rules regarding research has put...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: Asia-Focused Hedge Funds Offer Great Opportunities

Jun 23 2017 | 3:33pm ET

Emerging market strategies have outperformed their developed-market peers for five...

 
Error

From the current issue of