THE TELEGRAPH: The deceptively quiet Phoney War between Brussels and Anglo-Saxon finance is coming to an end. Life is about to change for hedge funds, commodity traders, and the 'prop desks' of global banks in the City of London.
"We want to know who is doing what with short-selling," said Michel Barnier, the European single market commissioner and the Frenchman in charge of the EU's new machinery of regulation.
"We need markets, and we need financial institutions that create value-added, but everyone has to be able to answer for what they are doing. People taking crazy risks linked to crazy rewards have to be brought back to their senses," he said, in a wide-ranging interview with The Daily Telegraph at the annual Ambrosetti conference on the shores of Lake Como.
Mr Barnier said the new European Single Market Authority (ESMA) endorsed in principle last week - along with EU banking and insurance watchdogs - will have sweeping powers to control derivatives.
"The EU authorities are going to look at every product. ESMA can restrict leverage, or in exceptional circumstances even ban a product altogether," he said. The Commission is introducing a text on derivatives next week as part of a new oversight machinery covering the gamut of finance and investment, including controls on private equity, hedge funds, as well as oil and currency trading.
Mr Barnier said there was no plan for a blanket ban on the short-selling of stocks or on the use of derivatives such as credit default swaps (CDS), famously exploited by funds to short Greek, Irish, Portuguese, Spanish bonds during Europe's debt crisis this year.
"It is not a question of prohibiting. Short-selling is useful, if used well, but we want to avoid abusive naked short-selling, and be able to take action in emergencies," he said. >>> Ambrose Evans-Pritchard in Como | Thursday, September 09, 2010
