–Adds Comments By FinMin Schaeuble To Story Sent At 08:27 GMT

BERLIN (MNI) – The German government cabinet Wednesday adopted a
bill that widens the recent temporary ban on uncovered short selling of
certain assets and makes them permanent.

German Finance Minister Wolfgang Schaeuble said at a press
conference that with the national ban, Germany’s government intends to
prod EU authorities to adopt Europe-wide regulations on the matter. He
said he was “confident” that the EU will come to an agreement.

The German draft would ban naked short selling on all shares of
German businesses listed on German exchanges.

Moreover, uncovered short selling would 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 purpose, 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
more significant 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 still requires approval 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 there.

Schaeuble said the government hopes to convince parliament to agree
to speed up the deliberation process in order to get the bill approved
before the summer recess.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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