BRUSSELS (MNI) – The European Commission Wednesday noted Germany’s
decision to temporarily suspend short-selling of some bonds but stressed
the need for European countries to act in a coordinated manner.
Germany Tuesday said it was banning naked short-selling of certain
euro-zone debt and credit default swaps as well as some financial
stocks, because, it said, excessive price movements could endanger the
stability of the financial system. The news put pressure on the euro
during trading on Wednesday.
“Financial markets are currently uncertain and volatile. I fully
understand German and Austrian concerns about possible impacts of naked
short selling in this context,” European Commissioner for Internal
Markets Michel Barnier said in a statement released Wednesday.
But he added that “these measures will be even more efficient if
they are coordinated at European level.”
It is important that Member States act together and that we design
a European regime to avoid regulatory arbitrage and fragmentation both
within the EU and globally.
Barnier said the Commission is looking closely at the “issue of
naked short selling very closely indeed” and that a task force has
already been set up.
“In particular we are focusing on the functioning of the credit
default swap market and the relation to the sovereign debt obligation,”
Barnier said.
“And we will be publishing within a few weeks a consultative
document covering draft rules on short selling,” he said. “As I have
already announced, my intention is to have a formal Commission proposal
ready in October this year.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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