Meeting on CDS market helps shape EU derivatives law – regulator

By Reuters Staff
March 5, 2010

BRUSSELS, March 5 (Reuters) – The European Union’s executive body said a meeting on Friday with supervisors and investment industry officials has helped shape a planned law on derivatives due later in the year.

The meeting was held amid pressure from France, Germany and Luxembourg to crack down on what they see as hedge funds using credit default swaps to push Greek government bonds and the euro lower.

“It was a useful meeting and it will feed into preparation for rules on derivatives that we will propose in the Summer,” a spokeswoman for EU Internal Market Commissioner, Michel Barnier, said.

“There was an exchange of views. We have not yet decided whether to hold another meeting. We will continue talking to stakeholders,” the spokeswoman said.

Traders fear regulators will introduce emergency measures like banning “naked” selling of CDS or where the buyer does not own any of the underlying asset.

Barnier is due to unveil his draft law around July that will mandate central clearing of as many types of derivatives contracts as possible that are part of the vast $450 trillion over-the-counter or off-exchange market in order to cut risk and improve transparency.

(Reporting by Huw Jones and John O’Donnell, editing by Ron Askew)

((Reuters messaging: huw.jones.reuters.com@reuters.net; + 44 207 542 3326; huw.jones@thomsonreuters.com))

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