EU support for naked CDS sets up collision with Parliament
Draft text would allow uncovered CDS but sketches out new reporting regime that could spook hedge funds
Finance ministers on the European Union's Economic and Financial Affairs Council (Ecofin) yesterday voted to allow the 'naked' buying of sovereign credit default swaps (CDS), putting them on a collision course with members of the European Parliament, who voted in March for restrictions that amount to a blanket ban. Market participants remain worried that the Council's stance – which includes sweeping new reporting rules and would still allow countries to impose temporary bans on naked CDSs –
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