The Presidency progress report includes the following outstanding key issues:
· Scope of the Regulation - inclusion of sovereign debt instruments. Some delegations strongly oppose to the inclusion of sovereign debt instruments in the scope of this regulation. They consider that there is no evidence of the need to regulate the sovereign debt market and that these rules might be detrimental to the functioning and the liquidity of this market.
· Restrictions on uncovered short sales. The views of delegations are divided on the need to impose permanent restrictions on short selling, more specifically in relation to sovereign debt instruments. Some argue there's notenough evidence to do so, and that this will reduce liquidity on the markets.
· Intervention powers of ESMA. The proposed Regulation gives emergency powers to ESMA to intervene in case of unjustified inaction of a competent authority. A number of delegations believe this goes too far, and/or don't want ESMA to interfere in the sovereign debt market. At the latest meeting of the Working Party, the Belgian presidency proposed as a compromise that emergency measures by ESMA in relation to sovereign debt instruments require the consent from the competent authority of the relevant Member State.
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