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Franco-German moves needed on short-selling, says regulator

FRANCE’S financial watchdog yesterday called for urgent Franco-German initiatives to combat short-selling, a week after it slammed its neighbour for taking unilateral action to ban naked short-selling of some instruments.

Jean-Pierre Jouyet, head of French financial markets regulator AMF, said he wanted to see better supervision of the market for credit default swaps (CDS), which act as insurance against the risk of default on debt.

“We are facing a grave crisis in terms of debt and public finances which is leading to a previously unseen lack of confidence in European sovereign securities,” Jouyet said yesterday.

Jouyet said Europe had reacted quickly to put in place a $1 trillion rescue package to help stabilise the euro but that it needed to go further to regain the confidence of investors outside Europe in the single currency.

“In order to check the trend that is emerging, Franco-German initiatives are more necessary than ever,” Jouyet added. Such moves would include a governance plan for the Eurozone and comparable measures to fight against short-selling on all securities and to supervise the CDS market, distinguishing between hedging and speculation.