ESMA and EFTA Surveillance Authority require reporting of net short positions of 0.1% and above

16 March 2020

In a public statement today, ESMA announced that it has issued a decision, effective immediately, temporarily requiring the holders of net short positions in shares traded on an EU regulated market (which is extended to regulated markets in the UK, Norway, Iceland and Liechtenstein, but not Switzerland) to notify the relevant national competent authority if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision. 

Helpfully, in February 2020, the Financial Conduct Authority updated its note on how to notify it of such net short positions. Information in respect of other national competent authorities may be found in ESMA’s note.

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.

In its statement, ESMA also noted that the EFTA Surveillance Authority, in cooperation with ESMA, has adopted a corresponding decision today, also effective immediately, applicable to EEA EFTA states' markets (i.e. Norway, Iceland and Liechtenstein).

ESMA considers that the current circumstances constitute a serious threat to market confidence in the EU, and that the proposed measure is appropriate and proportionate to address the current threat level to EU financial markets.

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