Short-selling bans and calculating short selling positions

In response to the impact of the Covid-19 outbreak, various EU countries have imposed temporary short-selling bans applying to both physical and derivative positions.

Short-selling bans

Jurisdiction Length of ban Application and comment

Austria

Applies from 18 March 2020 until the end of the day on
18 April 2020

The ban prohibits shorting or increasing existing net short positions in all shares admitted to trading on the Vienna Stock Exchange and which fall under the supervisory authority of the Austrian Financial Markets Authority. The ban applies to all basket and index-related instruments for which the shares subject to the ban make up 50% or more of the index or basket by value.

View the English translation of the Austrian legislation imposing the ban and the ESMA opinion.


Belgium

Initial one-day ban on 17
March 2020

Extended to apply from 18 March 2020 until 17 April 2020

Extended ban prohibits shorting or increasing existing net short positions in all companies listed on Euronext Brussels and Euronext Growth. The ban applies to index-related instruments if the shares subject to the ban represent more than 20% of the index weight.

View the resolution of the Financial Services and Markets Authority and the ESMA opinion.  

France

Initial one-day ban on
17 March 2020

Extended to apply from 18 March 2020 at 00:00
hours until 16 April 2020
at midnight

Extended ban prohibits shorting or increasing existing net short positions in all shares listed on a French trading venue where such shares fall under the jurisdiction of the Autorité des Marchés Financiers. The ban applies to indexed financial instruments or baskets of shares if the shares subject to the ban represent 50% or more of the composition of the index or basket.

View the decision of the Autorité des Marchés Financiers and the ESMA opinion.  

Greece

Applies from 18 March
2020 at 00:00:01 hours
(CET) until 24 April 2020
at 24:00:00 (CET)

The ban prohibits shorting or increasing existing net short positions in all shares admitted to trading on the Athens Stock Exchange.

View the decision of the Hellenic Capital Market Commission and the ESMA opinion.  


Italy

Initial one-day bans on
13 March 2020 and 17
March 2020

Extended to apply from the start of the trading day on
18 March 2020 until the
end of the trading day on
18 June 2020

Extended ban prohibits shorting or increasing existing net short positions in any of the shares included in Attachment no. 1 of the resolution (see link below). The ban applies to all index-related instruments for which the shares subject to the ban make up more than 20% of the index. However, the ban does not apply to shorting or increasing existing net short positions when the short position is aimed exclusively at covering the risk stemming from (i) the equity component of a previously purchased convertible bond, or (ii) previously purchased subscription rights. 

View the resolution of the Commissione Nazionale per le Società e la Borsa and the ESMA opinion.  

Spain

Initial one-day ban on
13 March 2020

Extended to apply from
17 March 2020 until 17
April 2020

It can be extended for additional periods not exceeding three months

Extended ban prohibits shorting or increasing existing net short positions in all shares admitted to trading on Spanish venues. The ban applies to index-related instruments or baskets of financial instruments where a majority of shares are covered by the ban. This includes cash transactions, derivatives traded on trading venues or OTC derivatives which create or increase a net short position, even intra-day. However, the ban does not apply to shorting or increasing existing net short positions (i) when the investor who acquires a convertible bond has a delta-neutral position between the equity component of the convertible bond and the short position taken to cover that component, or (ii) where the creation of, or increase in, the short position in shares is hedged by a purchase that is equivalent in terms of proportion of subscription rights.

View the statement of the Comisión Nacional del Mercado de Valores and the ESMA opinion.

We expect further bans to be imposed, and will monitor the websites of the regulators for this. At this stage, following a statement by the UK Financial Conduct Authority, we do not anticipate an extended short-selling ban in the UK; however, we are monitoring the situation.

Calculation of short positions: a reminder

Following decisions by ESMA and the EFTA Surveillance Authority requiring net short positions of 0.1% and above to be reported, managers may need to review how they calculate and report their short positions. As such, managers should remind themselves of the following:

  • Derivative and physical positions should be aggregated when reporting. Both physical and derivative positions are considered “short positions” under the Short Selling Regulation, and no distinction should be made in reporting those positions;
  • Care should be taken with synthetic shorts. If you have a net short position attributable to long cash and short swap (including long or short positions in American or Global Depositary Receipts) on the same issuer in respect of which there is a ban, you may not be allowed to sell the long position (as this would increase your net short position); and
  • Check how reporting should be undertaken. In February 2020, the UK Financial Conduct Authority updated its note on how to notify it of net short positions. Information in respect of other national competent authorities may be found in ESMA’s note.

This article was updated on 20 March 2020 to include details on Austria's ban on short-selling.