BaFin banned naked short sales and unsecured CDS on government bonds in the euro zone
The Federal Financial Supervisory Authority (BaFin) on Tuesday naked short sales of debt securities by euro zone countries, which are admitted to trading on a domestic exchange in the regulated market, temporarily prohibited. it has also temporarily banned so-called credit default swaps (CDS), where the reference obligation is a liability, at least one country of the euro area and they do not serve to hedge risks (unsecured CDS).
In addition, the BaFin naked short sales of shares of the following companies in the financial sector has not:
* AAREAL BANK AG
* ALLIANZ SE
* COMMERZBANK AG
* DEUTSCHE BANK AG
* DEUTSCHE EXCHANGE AG
* DEUTSCHE Postbank AG
* GENERALI HOLDING AG Germany
* HANNOVER REINSURANCE AG
* MLP AG
* Munich Reinsurance Company AG
These prohibitions apply from 19 May 2010, 00:00 clock, 31 March 2011, 24:00 Clock, and will be reviewed.
Contact for market participants to reach under the number 0228 / 4108 - 4004th
Yet isn't it ironic that just a few inches, pardon, centimeters below this notice we find this article on BaFin.de:
BaFin clarifies: So far no evidence of massive speculation against Greek bonds
The Federal Financial Supervisory Authority (BaFin) – contrary to media reports – has so far not found any evidence of credit derivatives known as Credit Default Swaps (CDS’s) being increasingly used of late to speculate against Greek government bonds.
BaFin increasingly has been monitoring the markets for government bonds and credit derivatives of selected countries within the Eurozone. In an analysis cited by the press, BaFin had explained its assessment.
In its analysis, BaFin had explained that a major cause of the increase in the CDS spread was growing demand for credit hedging against the country risk Greece.
The data published by the US Depository Trust & Clearing Corporation (DTCC), a trade repository, do not indicate that new open positions are being built up, nor do they point to speculative activities on a massive scale.