Short selling: Parliament contains financial market speculation. Markus Ferber MEP
Strict transparency requirements for short selling / European Parliament votes on new EU regulation
There will soon be binding EU standards for risk-oriented financial market instruments such as short sales. Today, the European Parliament adopted its position on a single set of rules for the containment of short selling and credit-default swaps (CDS). "Not every financial market transaction with considerable profits does make sense. We have to keep an eye on the financial market as a whole, operate clear rules and contain systemic risks. The new transparency standards for highly speculative financial instruments can help contribute to the stability of financial markets," said Markus Ferber MEP, who is in charge of the dossier for the EPP Group in the European Parliament.
Investors use credit-default swaps on government bonds to mitigate the risk of a default. "Uncovered CDS, however, are highly risky and can be used for speculation purposes to drive down sovereign bonds of countries with budget difficulties. In the case of Greece, CDS have fuelled speculation over the country's bankruptcy. To be able to handle the debt crisis in the Euro area it is of great importance to have a single set of rules," said Ferber.
The EPP MEP conceded that such financial instruments could provide for market efficiency and liquidity. In certain cases, however, they constituted a high risk to the stability of the markets. "This is why we not only need more transparency and a clear mandate for the supervisory authorities, but also uniform EU provisions for uncovered credit-default swaps."
Up to now there have been no EU rules on short sales. Member States have reacted differently to the financial market crisis. The European Parliament and the Member States have to find an agreement on the new EU regulation. Negotiations are expected to start in September.
For further information:
Markus Ferber MEP, Tel: +33-3-88177230
Thomas Bickl, EPP Group Press and Communications, Tel: +32-478-215372
Notes to Editors:
The EPP Group is by far the largest political group in the European Parliament with 264 Members.