Reuters: Regulatory News: EU watchdog says shortselling rules need changing

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EU watchdog says shortselling rules need changing Jun 3rd 2013, 10:00 LONDON, June 3 | Mon Jun 3, 2013 6:00am EDT LONDON, June 3 (Reuters) - The European Union's rules to stop abusive short-selling of banking shares and bets on falls in government bonds have improved market transparency but changes are needed to the seven-month old law, the bloc's market watchdog said on Monday. The European Securities and Markets Authority said the rules, rushed through at the height of the euro zone debt crisis to take effect last November, have had some positive effects. "However, ESMA is advising the European Commission to consider adjusting a number of aspects in the regulation that do not alter its main elements," the watchdog's chairman, Steven Maijoor, said in a statem. Short-selling is a bet on stock or bond prices falling. The seller borrows the securities first, sells them on loan and seeks to buy them back at a lower price to pocket a profit. The EU's first set of bloc-wide rules to curb short-selling was prompted by politicians who accused hedge funds of exacerbating the euro zone debt crisis by betting on falls in Greek and other government debt prices.

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