When bank share prices tumbled all over Europe last August,
Belgium, France, Italy and Spain outlawed short-selling of
certain bank stocks. The European Commission briefly considered
a ban on short-selling throughout the European Union, then
settled on a compromise that is only slightly more palatable to
hedge funds. Unless the EU legislative body has an unlikely
change of heart, starting November 1, the world will be able to
see just who is doing what to whom when investors short stocks
of companies on any EU-based exchange.
(Illustration by Brian
"It's always tempting for politicians to bash short-sellers,
but it is missing the point," says Thomas Deinet, executive
director of the Hedge Fund Standards Board in London, a global
body that promotes integrity and governance standards. The HFSB
has concerns about the EU's Regulation on Short Selling, as the
new ruling is officially titled. Deinet...