Short-selling should be regulated as some practices may create disorderly markets during extreme financial turmoil, a global body of supervisors said on Monday.
Short-selling has been blamed by critics for exacerbating the slide in bank shares during the credit crunch.
And the International Organization of Securities Commissions (IOSCO) policymakers, who have put forward recommendations to deal with the issue, have pointed to hedge funds as they often use the tactic.
"We believe that short selling should operate in a well-structured regulatory framework in the interests of maintaining a fair, orderly and efficient market," said Martin Wheatley, chairman of IOSCO's task force on short selling and also chief executive of Hong Kong's Securities and Futures Commission.
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