ESMA lowers net short position reporting threshold to 0.1%

In a decision notice released on 16 March 2020, ESMA has stated that the threshold for net short position reporting to EU regulators (in shares admitted to trading on an EU-regulated market) under the EU Short Selling Regulation (“SSR”) has been lowered temporarily to 0.1%.

This decision is based on the serious adverse effects on the real economy and on EU financial markets posed by the COVID-19 pandemic. ESMA deems this measure to be necessary given the resultant severe price falls that are undermining the price formation mechanism, thereby threatening the integrity and orderly functioning of the markets.

Key points to note:

• The measure only applies if positions reach or exceed the 0.1% threshold after the entry into force (on 16 March 2020); and
• ESMA considers that a duration of three months is justified considering the information available at the moment on the COVID-19 pandemic – and its effect on financial markets.

The decision will require swift action on the part of our clients and their vendors to adjust systems/processes for flagging and reporting net short positions in relevant issuers that breach the 0.1% threshold.

For More Information

To discuss anything covered in this alert, contact Ruth Avenell, James Andrews, or your usual ACA consultant. 

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