Germany May Widen Ban on Naked Short-Selling

Germany’s Finance Ministry seems set to extend a short-selling ban on the country’s exchanges.

As part of a national crackdown on financial-market speculation the German government proposed on Tuesday extending last week’s ban on some “naked” short selling — a practice of shorting shares and derivatives without owning them — to cover all stocks and euro-currency derivatives not intended for hedging.

According to the WSJ, the proposals, outlined by the Finance Ministry in a draft bill that will be discussed by the German cabinet next week, says “Naked short selling of stocks and the debt of euro-zone states that are listed on a domestic exchange in a regulated marketplace will be forbidden.” The document does not state whether the proposal is aimed at all shares, or specific companies.

Germany last week surprised its European and other international partners by announcing that it will ban the naked short-selling of eurozone government bonds, their CDSs and the shares of the country’s 10 biggest financial institutions.

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