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Financial services
Short-selling
The European Commission launched a public consultation on short selling in June 2010. This followed the various restrictions on short selling imposed by a number of Member States in the autumn of 2008 and more recent concerns about the possible role played by credit default swaps in relation to the prices for sovereign bonds.
On 15 September 2010, the Commission proposed a Regulation on short selling and certain aspects of credit default swaps. This proposal would introduce disclosure requirements for short selling and impose restrictions on naked short selling of shares and sovereign debt.
The European Commission’s consultation paper can be downloaded as follows:
For the draft Regulation, please see:
The UK introduced a temporary short selling prohibition in the autumn of 2008 at a time of extreme market turbulence. This temporary prohibition naturally expired in January 2009 when turbulent market conditions improved – and principally when the sharp share price declines in individual banks, which had led to pressure on their funding, had normalised. The FSA maintains a disclosure regime in relation to short positions in stocks in UK financial sector companies as a proportionate response to any outstanding or future risk short selling may present.
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