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Merkel and Sarkozy push for short-selling ban

Germany and France are calling for the rapid introduction of an EU-wide ban on the short selling of some shares and government debt.

German Chancellor Angela Merkel and French President Nicolas Sarkozy co-signed a letter urging the European Commission to bring forward proposals for tougher rules on financial speculation, including a ban on naked short selling, from October to July this year.

The letter states: “The return of strong volatility in the markets makes it necessary to question certain financial methods and certain products such as naked short-selling and credit default swaps.”

Last June the FSA extended its short selling disclosure regime, requiring firms to disclose net short positions exceeding 0.25 per cent of a company’s issued shared capital, or increases by 0.1 per cent bands above that.

The regulator has previously stated that it has no current plans to ban short selling and sees it as a legitimate trading technique.

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