EU tightens short selling rules

The European Union has agreed in principle to tighten rules against the short selling of shares and bonds and to temporarily ban trading when the market is in turmoil.

Representatives of the European Parliament and member states reached the agreement on Wednesday after discussing rules for speculative financial trading.

Under the agreement, the transparency of short selling will be heightened by requiring investors to report to financial regulators of member states. If the market is thrown into turmoil, then each government will be allowed to temporarily ban trading.

Also, speculative trading of credit default swap on government bonds will be banned in principle.

The rules are expected to receive final endorsement from the full European Parliament and EU finance ministers next month.

The rules are intended to take effect on November 1st, 2012 and will be used to regulate speculative trading more strictly to stabilize the financial markets in Europe.

Thursday, October 20, 2011 06:46 +0900 (JST)