The House of Lords EU Sub-Committee on Economic and Financial Affairs has written to Mark Hoban in response to the European Commission's proposal for a Regulation on short selling and certain aspects of credit default swaps (CDS). The letter sets out the Committee’s position ahead of a planned meeting of the Economic and Financial Affairs Council (ECOFIN) on 15 March. The Committee:

  • supports a uniform approach to the regulation of short selling;
  • notes that short selling is an established practice in many markets and can promote efficiency;
  • is concerned about the difficulties in knowing the level of short selling, especially through CDS, in the sovereign bond markets;
  • is generally worried about lack of transparency in CDS operations;
  • supports the parts of the Commission proposal that would enhance transparency and provide greater, consistent, disclosure to regulators;
  • on balance, does not support the Commission’s proposal to restrict naked short selling and CDS on sovereign bonds;
  • does not support an outright ban on naked CDS; and
  • stresses the need for coordination of EU policy with the US.

(Source: Letter to Mark Hoban, 8 March 2011)