ESMA extends short sellers’ reporting to September
Pan European financial regulator The European Securities and Markets Authority (ESMA) has announced that it has renewed its decision to temporarily require the holders of net short positions in shares traded on a European Union (EU) regulated market to notify the relevant national competent authority (NCA) if the position exceeds 0.1% of the issued share capital.
ESMA considers that its renewed measure will maintain the ability of NCAs to deal with any threats to market integrity, orderly functioning of markets and financial stability at an early stage, allowing them and ESMA to timely address such threats in case of signs of market stress.
ESMA said that the COVID-19 pandemic continues to have serious adverse effects on the real economy in the EU with any outlook for a future recovery remaining uncertain. While EU financial markets have partially recovered since 16 March 2020, when the short selling reporting threshold was lowered to 0.1%, this uncertainty is potentially threatening their future development and the stability of the financial system in the EU.
The measure applies from 17 June 2020 for a period of three months – i.e. through to September 17, 2020. The temporary transparency obligations apply to any natural or legal person, irrespective of their country of residence. They do not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.
ESMA, in coordination with NCAs, continues to monitor developments in financial markets as a result of the COVID-19 situation and is prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection.