EU starts roll out of share short selling regime

 

Securities regulators in the European Union said on Tuesday they will start rolling out requirements for reporting short positions in shares as part of wider efforts to improve transparency in markets.

Short selling of shares is a practice favoured by hedgefunds and involves selling a stock that is not already owned, in the hope its value will fall by the time a purchase is required to settle the trade.

Interim short selling curbs were introduced by some EU states in late 2008 when bank shares came under pressure but regulators want a single, bloc-wide regime to end confusion among investors.

The Committee of European Securities Regulators (CESR) saidit has submitted a report to the EU's executive European Commission in which it recommends the introduction of a pan-EU disclosure regime for net short positions in shares.

The report stops short of recommending an outright ban,saying legitimate short selling plays an important role in financial markets by contributing to price discovery and increasing liquidity.

"In the meantime, those CESR members that already have powers to introduce a permanent disclosure regime, as elaborated in the report, will begin the process of implementing this regime" CESR said in a statement.

"Those CESR Members who do not have the necessary legal powers will aim towards implementing this regime on a best efforts basis, until an EU regime is adopted."