BERLIN (MNI) – The German government cabinet on Wednesday adopted a
bill that widens the government’s recent temporary ban on uncovered
short selling of certain assets and makes them permanent.
The draft foresees a ban of naked short selling on all shares of
German businesses listed on German exchanges.
Moreover, uncovered short selling is to be prohibited on all bonds
issued by Eurozone federal, regional or local governments.
The bill also stipulates the prohibition of credit default swaps on
government bonds of Eurozone states if there is no demonstrable hedging
purpose.
The Finance Ministry would be authorized to grant exemptions to
these bans in order to prevent, for example, damage to the benchmark
role of German bonds.
The Finance Ministry, along with the financial watchdog agency
Bafin and the Bundesbank, would be empowered to interdict currency
derivatives on the euro which have no hedging purposes, as well as
derivatives that emulate short selling of German shares and Eurozone
government bonds.
The bill also introduces a two-stage system of transparency for net
short selling positions on German shares. In the first stage, the Bafin,
is to be informed. In the second, short selling positions are to be made
public.
The bill must still approved by the lower house of parliament, the
Bundestag, where Chancellor Angela Merkel’s CDU/CSU-FDP coalition wields
a majority. The upper house, the Bundesrat representing the 16 states,
can delay the bill but not block it indefinitely. The Merkel camp
recently lost its majority in the Bundesrat.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
[TOPICS: MT$$$$,MGX$$$,M$X$$$,M$G$$$,MFX$$$,M$$CR$,M$$FX$]