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Germany, France Want EU Short Sell Ban

Thursday, 10 Jun 2010 01:59 AM

Germany and France have joined forces to call for a swift, European Union-wide ban on the short selling of some shares and government debt.

Angela Merkel, the German Chancellor, and Nicolas Sarkozy, the French President, co-signed a letter urging the European Commission to bring forward proposals for tougher rules on financial speculation - including a ban on naked short selling - to July. Previously proposals were expected in October.

"The return of strong volatility in the markets makes it necessary to question certain financial methods and certain products such as naked short-selling and credit default swaps," the leaders said in the letter.

Short-selling takes place when an investor borrows shares, sells them, and hopes to make a profit by buying them back when the price falls. Naked short selling involves investors selling a share or a bond without actually borrowing the security.

The process has come under fire from senior European politicians, most notably Ms Merkel, who have blamed short selling for exacerbating the euro-zone debt crisis, prompting market volatility and a sharp fall in the value of the euro.

However, the reaction has prompted criticism among investors and City commentators who have argued that leaders are applying an overly simplistic critique.

To read full London Telegraph story — Go Here Now.

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Germany and France have joined forces to call for a swift, European Union-wide ban on the short selling of some shares and government debt.
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2010-59-10
Thursday, 10 Jun 2010 01:59 AM
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