NEWS

Wall Street Journal correspondent Andrea Thomas reports (“German Short-Selling Ban Watered Down,” June 28) that “Germany’s parliamentary finance committee on Monday watered down a controversial bill banning ‘naked’ short selling of all stocks and euro-currency derivatives that aren’t intended for hedging against currency risks.”
The Finance Ministry could not implement a ban by decree during [...]

The International Securities Lending Association said “European Union-wide proposals to restrict hedge funds and other stock traders from taking short positions in stocks could lead to less liquidity and wouldn’t necessarily create safer markets,” Dow Jones reports (“EU Short Selling Rules Could Hinder Markets,” June 23).
“The European Commission earlier this month opened a consultation that [...]

The Committee of European Securities Regulators (CESR) published on June 2 technical details for a pan-European short selling disclosure regime, which it proposed in March. CESR provides technical details in five areas: method of calculating economic exposure; calculation of changes in a net short position; clarification of the aggregation requirement; mechanics of disclosure; and [...]

The International Centre for Financial Regulation has prepared a comparative table, based on a variety of news sources and documents published online, to look at similarities and differences between the three proposals (Commission, ECON Committee and ECOFIN).

The EU Commission began its “public consultation” process by releasing its paper setting out the purpose and scope of standalone legislation to address potential risks from short selling.
The paper groups policy options into three types:
• Rules to increase transparency related to short sales
• Rules to reduce risks of uncovered short selling
• Emergency powers [...]

University College Cork Professors Ciara Connolly and Mark C. Hutchinson ( “Dedicated Short Bias Hedge Funds – Just a One Trick Pony?” ) looked at dedicated short bias (DSB) funds during the financial market unrest during 2007-2008. They found that “DSB hedge funds are indeed more than a one trick pony. They are a [...]

Abraham Lioui, Professor of Finance at the EDHEC Business School,, shows (“Spillover Effects of Counter-cyclical Market Regulation: Evidence from the 2008 Ban on Short Sales,” March 2010) that bans on short selling “were responsible for a substantial increase in market volatility.” Further, “the ban did not ease the downward pressure in the financial markets. [...]

Cardiff University Professor Laurence Copeland argues in his article (“The EU and the Hedge Funds: the Vendetta Goes On,” Reuters, May 24, 2010) that the “collateral damage” of EU efforts to increase regulation of hedge funds “will threaten every investor, pension fund contributor or life insurance buyer, and ultimately every taxpayer throughout the whole [...]