Financial Regulatory Forum

Short-selling and CDS regulation in EU: Less to nakedness than meets the eye, funds and firms argue

By Guest Contributor
March 5, 2012

By Peter Elstob

LONDON/NEW YORK, March 5 (Thomson Reuters Accelus) -¬†Regulators and market participants continue to differ fundamentally over when a credit default swap should be deemed to be uncovered, or ‘naked’, and when investors are using CDS as a legitimate hedge. If a sovereign CDS can be demonstrated to be hedging counterparty or systemic risk, it can be exempted from the provisions of the proposed¬†European short-selling regulation, which is aimed at abusive use of sovereign CDS by financial institutions to bet against countries’ debt.

BREAKINGVIEWS – Pressure for sovereign CDS ban should be resisted

By Reuters Staff
February 17, 2010

– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –