By Huw Jones
LONDON, March 2 (Reuters) – Securities regulators in the European Union said on Tuesday they will start rolling out requirements for reporting net short positions in shares as part of wider efforts to improve transparency in markets.
Short selling of shares is a practice favoured by hedge funds and involves selling a stock that is not already owned, in the hope its value will fall by the time a purchase is required to settle the trade. The difference in price is pocketed as profit.
Interim short selling curbs were introduced by some EU states in late 2008 when bank shares came under pressure, but regulators want a single, bloc-wide regime to end confusion among investors.
The Committee of European Securities Regulators (CESR) said it has submitted a report to the EU’s executive European Commission in which it recommends the introduction of a pan-EU disclosure regime for net short positions in shares.
For copy of report click on http://www.cesr.eu/popup2.php?id=6487
It stops short of recommending an outright ban, which some EU states introduced temporarily, saying legitimate short selling plays an important role in financial markets by contributing to price discovery and increasing liquidity.