Following the recent adoption of temporary bans on short selling of financial stocks in France, Belgium, Italy and Spain, the European Commission reportedly is urging European Union (EU) member states to reengage their efforts to adopt a universal framework of short selling rules throughout the European Union. According to the European Commission spokesperson, a coordinated effort with respect to short selling abuses would facilitate a more effective response by regulators, prevent fragmentation of the EU market and ensure the smooth functioning of the internal market.

The European Commission's announcement follows the recent volatility in the global financial markets which, according to the European Securities and Markets Authority, was believed to be the result of false rumor mongering in tandem with excessive short selling. The European Commission first proposed a universal framework for short selling regulation in September 2010 in an attempt to enhance the EU's regulatory scheme following the 2008 financial crisis. However, the adoption of this proposal stalled due to significant disagreements between EU member states and the European parliament. A copy of the European Commission's original proposal released on September 15, 2010 is available by clicking here.