Europe to vote on short-selling

THE EUROPEAN Parliament has passed a law placing restrictions on short-selling and trading of instruments linked to EU sovereign bonds, despite evidence similar temporary bans have had little effect on price performance.

The ban on “naked” trading of credit default swaps (CDS) will prevent investors from buying the instruments if they don’t own the bonds themselves. It will be left up to the European Securities & Markets Authority (ESMA) to work out how the rules would work in practice if they are also approved by the European Council.