EU Comm Consults On Plan To Ban Naked CDS Trades In Emergency

BRUSSELS (MNI) – Emergency powers to stop trading of naked credit
default swaps (CDS) could be given to national supervisors to use in an
emergency situation, the European Commission said on Monday, as it
launched a consultation on the topic.

It said the regulators would be able to “temporarily prohibit or
restrict” such trades if the new powers are given the go-ahead.

Credit default swaps and other market trades became the political
focus of recent sovereign debt crisis, as policymakers looked for ways
to limit market volatility. Germany last month banned some forms of
short-selling but the Commission wants to see an EU-wide coordinated
approach.

At the moment, each of the EU’s 27 countries has a different
approach to rules, with 11 out of 27 requiring the disclosure of
short-selling and 8 out of the 27 banning naked short-selling, a
Commission official said.

Any ban imposed would be “temporary in nature and subject to
coordination” by the European Securities and Markets Authority, the
Commission said.

The Commission is considering using the measures as part of a
package currently under consideration. The proposals are currently out
for consultation, a process which will end July 10 and the Commission
will aim to make legislative proposals before the end of the summer, on
September 23, it said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

[TOPICS: MT$$$$,M$$FX$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]