Germany may widen a ban on speculative trades in financial stocks to cover all shares, a draft finance ministry document showed today.
The draft said a raft of measures aimed at stabilising financial markets would include a "ban on naked short selling of shares, including derivatives referring thereto."
The document did not state whether the proposals were aimed at all shares or specific companies, and finance ministry officials were not immediately available for comment.
One government source said it was intended to apply to all shares traded in Germany.
Last week, Germany caught markets and its European Union partners unawares when the government's financial watchdog announced a ban on naked short-selling of shares of Germany's top 10 financial institutions, and of euro government bonds and related credit default swaps.
Today’s news, by contrast, had little market impact, and traders and economists questioned the efficacy of such a ban.
"This is an isolated step in a globalised world," said Christoph Schmidt, the head of Germany's RWI economics institute. "Hence it could simply have no impact."
The finance ministry draft did not list specific shares to be affected. But it said there was also a proposal to introduce a "transparency system for naked short-selling positions", and the ban would also cover euro currency derivatives not used for hedging.
Naked short selling involves selling securities without owning or borrowing the underlying assets in the hope of buying them back at a lower price.
In contrast to the sharp fall in the euro and shares prompted by last week's announcement, the news was having a limited impact.
The head of Spain's stock market regulator CNMV, Julio Segura, said Germany's crackdown on short selling was ill-judged.
"The regulatory changes ... encouraged by the German government are heading in the wrong direction," Mr Segura said during an address to parliament. "If what we are trying to do is just ban or hamper every kind of bet on the downside ... then we would have to ban selling debt futures, or call options, which would be ridiculous," he added.