ESMA extends lower threshold for short position reporting
11 June 2020 Paris
Image: TippaPatt/Shutterstock.com
The European Securities and Markets Authority (ESMA) has extended the timeframe for requiring holders of net short positions exceeding 0.1 percent of the issued share capital to report to regulators by an additional three months.
Since March, ESMA has imposed a revision to the EU's Short Selling Regulation which temporarily lowered the disclosure threshold for net short positions in the EU from 0.2 percent to 0.1 percent in a bid to gain greater transparency in the short selling market during the worst of the COVID-19 market disruption.
The rule was set to expire on 17 June but will now apply for a further three months from that date, meaning traders will have to continue disclosing their positions for each 0.1 percent above the lowered threshold.
ESMA says the renewed measure will maintain the ability of national competent authority (NCA) to deal with any threats to market integrity and ensure the orderly functioning of markets and financial stability.
The EFTA Surveillance Authority, in cooperation with ESMA, adopted a corresponding decision, also effective as of 17 June, applicable to EEA EFTA States' markets.
ESMA’s decision comes a few weeks after the NCAs of France, Greece, Spain, Austria, Italy and Belgium unilaterally chose to not renew their respective short selling bans in mid-May.
The restrictions on the opening of new short positions were also a symptom of COVID-19-inspired market turmoil that saw the regulators scramble to pull their equities markets out of free-fall in early March.
Since March, ESMA has imposed a revision to the EU's Short Selling Regulation which temporarily lowered the disclosure threshold for net short positions in the EU from 0.2 percent to 0.1 percent in a bid to gain greater transparency in the short selling market during the worst of the COVID-19 market disruption.
The rule was set to expire on 17 June but will now apply for a further three months from that date, meaning traders will have to continue disclosing their positions for each 0.1 percent above the lowered threshold.
ESMA says the renewed measure will maintain the ability of national competent authority (NCA) to deal with any threats to market integrity and ensure the orderly functioning of markets and financial stability.
The EFTA Surveillance Authority, in cooperation with ESMA, adopted a corresponding decision, also effective as of 17 June, applicable to EEA EFTA States' markets.
ESMA’s decision comes a few weeks after the NCAs of France, Greece, Spain, Austria, Italy and Belgium unilaterally chose to not renew their respective short selling bans in mid-May.
The restrictions on the opening of new short positions were also a symptom of COVID-19-inspired market turmoil that saw the regulators scramble to pull their equities markets out of free-fall in early March.
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