MEPs have voted on the Commission’s draft Regulation on short selling and credit default swaps (CDS). The Economic and Monetary Affairs Committee (ECON) had three major concerns:

  • to ban anyone from entering into a CDS based on sovereign debt if they do not already own sovereign debt linked to that CDS or securities whose price depends heavily on the performance of the country in question;
  • that any naked short sales must be converted into short sales by the end of the same trading day. ECON said fines for breaching this requirement should be high, and supported the Commission’s position that firms must not only identify where they will borrow from, but have a guarantee that the securities in question will be available; and
  • that national supervisors can require more reporting from firms in exceptional circumstances. But ECON’s view is that, otherwise, firms can just report short sales at the end of the trading day, rather than immediately, as proposed by the Commission.

(Source: Press Release)