European Union (EU) finance ministers have signed a deal to limit short-selling of shares and sovereign debt, The Wall Street Journal reports. The rules will allow the European Securities and Markets Authority to prohibit short-selling of shares and EU sovereign debt, with the approval of the government, in case of emergencies. Though naked short-selling will be banned, yet the rules allow an exemption for governments, demonstrating the ban is affecting liquidity for their debt. The EU will now negotiate a final version of the legislation with lawmakers at the European Parliament, which are in favor of broader rules that will also cover short sales of credit default swaps linked to sovereign debt.
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