German naked short-sale ban on
German lawmakers today approved a government bill that would cement in law and extend curbs on speculative trading practices following the country’s abrupt imposition of restrictions in May.Updated: Jul 02, 2010 20:29 IST
German lawmakers on Friday approved a government bill that would cement in law and extend curbs on speculative trading practices following the country’s abrupt imposition of restrictions in May.
The bill — which the government said is aimed at speeding agreement on stronger European rules, but the opposition denounced as ineffective — passed parliament’s lower house with the votes of Chancellor Angela Merkel’s center-right coalition. Germany’s regulator in May banned so-called naked short-selling of eurozone government debt and major financial stocks, as well as naked credit default swaps involving eurozone debt. The legislation, which now goes to parliament’s upper house, would extend the ban to all stocks traded on German exchanges. The abrupt initial ban rattled financial markets, with analysts saying unilateral action by one government suggested lack of unity in combatting the market turmoil from Europe’s government debt crisis.
Politicians and many others argue that markets’ behavior worsened Europe’s debt crisis. In Germany there have been increasing calls across the political spectrum for tougher regulation. "I wouldn't call it going it alone, but going ahead," said Ralph Brinkhaus, a lawmaker with Merkel's Christian Democrats. "There are situations in which going ahead is necessary; we all saw (at the Group of 20 summit in) Toronto how difficult it is to obtain international consensus."
Government lawmakers maintained that Germany had helped push forward discussions in Europe. Last month, European Union leaders asked for EU rules to govern naked short-selling and credit default swaps.
Some market watchers say most such trading is conducted outside Germany.
The government has conceded that its move effectively bans naked short-selling only of German and Austrian government debt.