EUROPE: EU short selling of cash government bonds

Monday May 9 2011

Further to the update of 8 March, it is being widely reported that a compromise deal to the proposed European short selling measures, which would prohibit certain trades in sovereign bonds and prohibit naked EU short selling, is to be discussed next week. The deal to be discussed would relax the ban on naked EU short selling in sovereign credit default swaps if liquidity in government bond markets was seriously affected. Many member states have opposed the European measures due to a belief that an outright prohibition could reduce liquidity in government bond markets and push up borrowing costs.

This information will be updated as more details become available.