EUROPE - Further delays at a Council of the EU meeting in Brussels involving national finance ministers continued to hamper progress of proposed regulation on short selling.

The principal sticking point in the legislation concerns the granting of various powers to the European Securities and Markets Authority (ESMA).

The European Parliament, along with the Commission, both have taken a pro-ESMA stance when it comes to supporting its powers over national supervisors.

The Parliament takes the strongest line. It would give the authority the right to conduct unannounced, on-site inspections of financial institutions.

As for the national ministers, their official position would limit ESMA's powers in the field of short selling and sovereign debt issues.

But Pascal Canfin - the European Parliamentary rapporteur for the regulation on short selling and certain aspects of credit default swaps - disagrees.

"The Council would give veto rights to member state governments over ESMA," he said.

He also objected to a legislative watering down, in that the Council has now agreed to permit 'naked', un-supported selling of credit default swaps derivatives in "exceptional circumstances".

An official at one of the EU institutions told that the main national objector in the Council over the ESMA matter was the UK, with the support of the Czech Republic, Poland, Spain and Sweden.

The group of opponents has thinned since March. Then, it also included the Netherlands, Finland, Demark, Luxembourg and Bulgaria.

Now, the differences mean that, overall, the clearance of the regulation though the Brussels system could be held up until June and possibly even September. It was formerly scheduled for May.

Final accord would be signalled by a vote in plenary in the Parliament.