Naming Names in Europe

March 29, 2012   Jan Alexander

Managers say a proposed regulation on short-sale disclosures will restrict their ability to hedge.

   
  (Illustration by Brian Cairns)
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.

"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...

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