Germany considers wider naked short-selling ban

The Associated Press
Tuesday, May 25, 2010; 12:25 PM

BERLIN (AP) -- The German government is considering widening curbs on speculative trading practices under draft legislation that could extend a ban on so-called naked short selling to all stocks.

Germany's market regulator surprised markets last week with an immediate ban on naked short-selling of eurozone government debt and shares of major financial companies. It applies through March 31.

Draft legislation obtained Tuesday by The AP envisions a ban on naked short-selling of "shares, including derivates related to them." It has been sent to financial industry organizations for discussion.

Naked short-selling involves a trader selling shares or investments he doesn't own, without borrowing them first -- the normal practice in short selling. Germany is keen for action on tougher market regulation following the eurozone debt crisis.

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