Hedge funds are reconsidering their strategies as European regulators decide whether to extend short-selling prohibitions, Reuters reports. Funds are turning wary in anticipation of increased intervention by European stock market authorities.

Managers and the banks that assist funds structure their trades are puzzled by some aspects of the bans, which were placed by four countries to curb wild swings in stock markets, especially financial shares. Long-short equity hedge funds, which often match a bet on a rising stock price with a bet on a falling stock price in the same sector, and event-driven funds that hedge their bets on events such as takeover, could be affected most.

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