EC proposes tough shorting rules but stalls on CDS ban

Naked short-selling of shares would be banned throughout the European Union if proposals published today by the European Commission (EC) come into force. The proposals would also give national supervisors emergency powers to ban short-selling of stocks or bonds - or any other transaction that effectively translates into shorting an underlying security - for up to six months.

However, the EC is not suggesting a ban on naked shorting of credit default swaps (CDSs) on European government bonds -