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Caught short

Thursday 10 June 2010 - by Bernadette Mill


Critics of this proposal may argue that flagging will not provide regulators with details of existing short selling positions in the market, therefore it by no means acts as a deterrent to brokers engaging in more riskier business such as aggressive short selling or naked short selling.

It can also be argued that introducing a flagging system could be costly and highly bureaucratic for interested parties. The alternative approach of making regulators aware of significant short positions is dependent upon the contents of a disclosure requirement.

The German Government is under increased pressure as Merkel has lost her majority in the Bundesrat (The Upper House) following a heavy defeat in North Rhine-Westphalia and the recent resignation of the German President Horst Kohler, who also belongs to Merkel’s Christian Democratic Union.
Merkel appears to be sending conflicting messages as she proclaims to be a euro-federalist in favour of ‘ever closer union’ but on the other hand, she has presided over unilateral action.

Germany is constantly finding ways to prove its commitment to the European project; this recent decision could be part of a wider strategy to ensure that other eurozone countries adopt Germany’s stance on restricting fiscal practices.




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