EU told to alter new rules on short-selling

City A.M. Reporter
EUROPEAN Union rules to curb abusive short-selling of shares and government bonds have made financial markets more transparent, but changes are needed to the seven-month old law, the bloc’s market watchdog said yesterday.

Under the new rules, which apply to bank shares and some sovereign bonds, short positions above a certain threshold must be reported to supervisors and markets.

The measures, the EU’s first set of bloc-wide rules to curb short-selling, were rushed through at the height of the Eurozone debt crisis and took effect last November.

The European Securities and Markets Authority (ESMA) said the rules have had some positive effects.

“However, ESMA is advising the European Commission to consider adjusting a number of aspects in the regulation that do not alter its main elements,” chairman Steven Maijoor said in a statement.

ESMA said the rules have brought a slight fall in price volatility but have made no major impact on trading volume. It recommended changes in, for example, the way net short positions in shares and sovereign debt are calculated.