Trilogue agreement by Council and Parliament on new rules for short selling and Credit Default Swaps
October 18, 2011
On 18 October 2011, the European Parliament published a press release on an agreement with the Presidency of the EU Council on the proposed regulation on short selling and certain aspects of credit default swaps (CDS).
The three rules which will be introduced are:
1. A ban on naked CDS trading with a carve out for national authorities in relation to sovereign debt market dysfunction;
2. A set of powers for ESMA to restrict short selling and to act as an intermediary for any national authority wishing to introduce measures for exceptional circumstances; and
3. An increase in reporting requirements leading to enhanced transparency.
The plenary vote of the EU Council and Parliament is scheduled to take place between 13-18 November 2011. The regulation is expected to enter into force in November 2012.