EU adopts stricter rules on short selling

The European Union agreed Tuesday to more strictly regulate the short selling of shares and bonds and to ban so-called "naked" credit default swaps on government bonds, moves officials said will contribute to financial stability.

After long discussions, representatives of the European Parliament and EU member states reached a compromise on the new rules, which restrict practices critics say have exacerbated financial crises and market selloffs.

The regulation seeks to differentiate between investors who use short-sales as a legitimate tool to hedge, or insure, potential losses on other assets like shares or bonds, and speculators, who may be trying to make a profit by influencing market moves.

For more: EU adopts stricter rules on short selling - CBS News