European Financial Industry: EU court rebuffs UK legal challenge to short-selling law

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Londen City: "The Party Is Over"

he UK government's attempt to limit the extent of European Union power to ban certain financial practices has failed in the courts.

In 2012, the EU passed a law giving it the power to ban short-selling - betting on whether shares or other securities will fall in price - in emergency situations.

The UK challenged the law as a restraint of trade on the City, but the EU's highest court rejected the case.
Britain will not be able to opt out.

EU authorities believe short-selling contributed to financial instability during the region's debt crisis by increasing the volatility of stocks.

Under the new law, the European Securities and Markets Authority (ESMA) can ban short-selling if it thinks the practice threatens the stability of the EU financial system.

Britain has argued that such measures interfere with the efficiency of the financial markets.

The Luxembourg-based Court of Justice said the EU's new powers were "compatible with EU law" and dismissed the UK's legal case "in its entirety".

Read more: BBC News - EU court rebuffs UK legal challenge to short-selling law

Turkey Curbs Short-Selling After Bans in Greece, South Korea

Turkey moved to curb short sales and threatened "severe penalties" for stock manipulation, joining nations from Greece to South Korea in seeking to stem bearish bets after the worst tumble in global stocks since 2008.

The Istanbul Stock Exchange raised the minimum cash or equity required to initiate a short-sale to 70 percent from 50 percent and said any violations could be met with "severe penalties," according to an e-mailed statement today. In a short sale, an investor borrows a security and sells it, expecting to profit from a decline by repurchasing it later at a lower price.

Regulators are investigating whether short sellers manipulated share prices after the ISE National 100 Index lost 19 percent this month. South Korea began a three-month ban on short sales yesterday and Greece started a two-month prohibition Aug. 9, while Italy increased disclosure rules for short sales in July.

For more: Turkey Curbs Short-Selling After Bans in Greece, South Korea

Germany Wants Far-Reaching Ban of Naked Short-Selling in Europe - 71% of British vote in favor of banning short selling in Poll

The German government promotes a "far-reaching" ban of so-called naked short-selling of shares, government bonds and credit default swaps in Europe, the Berlin- based Finance Ministry said today.

"Only through this can destructive speculation be countered in a convincing way," the ministry said by e-mail. "We support the measures announced by France, Italy, Spain and Belgium."

Germany banned naked short-selling a year ago, the ministry said.

Note EU-Digest: Finally the EU is waking up on this issue. A poll by the British Guardian newspaper shows 70.9% of the people voted in favor of banning short-selling

For more: Germany Wants Far-Reaching Ban of Naked Short-Selling in Europe