Lack of co-ordination contributes to European market sell-off

The Bafin decree on short selling in May signalled a lack of agreement by European regulators, say participants

The lack of a co-ordinated regulatory approach to the eurozone debt crisis was a key driver of the extreme volatility in European financial markets in May, say dealers and investors. Last month saw German securities regulator, Bundesanstalt für Finanzdienstleistungsaufsicht (Bafin), impose a shock unilateral ban on naked short selling – a move that contributed to wide-scale selling of the euro and global equity markets, say participants.

The Bafin decree, which came into effect on May 19, banned