Traders wait on EC's sovereign CDS meeting

The European Commission is holding a meeting in Brussels today with regulators, rating agencies, banks and investors over the market practice of trading credit default swaps on sovereign debt, it has been variously reported. Some European officials are calling for the outright shorting of government debt risk through ‘naked’ CDS positions to be banned, following recent speculation on Greece.

However, it is thought likely that resulting action is likely to be limited to requiring more disclosure on such positions, say sources.

Politicians such as Eurogroup president Jean-Claude Juncker and French economy minister Christine Lagarde claim that hedge funds and other speculators have used to CDS to push debt spreads wider and the euro lower.