Published: 2nd June 2010

Following on from Regulatory Roundup 14 which detailed the surprise temporary BaFin naked short selling restrictions, BaFin plan to permanently ban naked short selling of certain euro zone securities. The draft bill proposes to ban naked short selling of domestic German stocks, credit default swaps based on eurozone sovereign bonds and currency derivatives if they were being used speculatively rather than for hedging purposes.

However according to a copy of the bill obtained by Reuters, the German cabinet have come to an agreement on these new extended measures, watering down the proposals (as mentioned above) so that there will now be no blanket ban on euro derivatives trading.

These extended measures are expected to become law by mid July, despite a lack of European consensus on the issue.

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