BERLIN (MNI) – German Chancellor Angel Merkel and French President
Nicolas Sarkozy in a joint letter have urged European Commission
President Jose Manual Barroso to speed up efforts to introduce stricter
controls for CDS markets and uncovered short-selling and to consider an
EU-wide ban of these instruments.
“All measures possible in this field should be presented before the
July meeting of the Council of [EU] Finance and Economics Ministers,”
Merkel and Sarkozy wrote in their letter released by the German
government on Wednesday.
The two leaders pressed for more transparency regarding
short-selling positions on stocks and bonds, especially on government
bonds.
“The work of the European Commission should also extend to the
possibility of an EU-wide ban of uncovered short selling of all or
certain stocks or government bonds as well as all or certain uncovered
CDS on government bonds,” Merkel and Sarkozy said in the letter.
Germany’s cabinet recently adopted a bill which widens the
government’s new national 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 hedging purpose
detectable.
Furthermore, the Finance Ministry as well as the financial watchdog
BaFin together with the Bundesbank are to be empowered to prohibit via
statutory order currency derivatives on the euro which have no hedging
purposes as well as derivatives which emulate the short-selling of
German shares and bonds of Eurozone governments.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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