U.S. – FINRA Fine CS Options Reports

On 16 May, FINRA fined Credit Suisse $200k for option reports.

  • Bank fined $200k, of which $75k payable to FINRA and install compliance controls.
  • For reporting options positions to large options positions reporting (LOPR) system.
  • Alleged Violations
  • Bank failed to report over the counter (OTC) options positions to the LOPR system.
  • Reported positions with inaccurate tax ID or tax type fields in millions of instances.
  • Failure to report, effected opening trades in single security for customer accounts,
    acting in concert that exceeded position limit on both sides of market for 107 days.

Australia – ASIC Short Selling Relaxation

On 14 May, ASIC sought feedback on proposed short selling rule.


  • Grant legislative relief to allow market makers of certain exchange-traded products
    to naked short sell units in exchange traded fund or managed fund making market.
  • Relief to allow naked short sales of unissued products during a deferred settlement.
  • Also for naked short sales connected to IPO sell downs with special purpose vehicle.
  • Change relevant time that short positions are calculated, remake sunsetting orders.
  • After ASIC aims to consolidate all short selling-related relief into a single instrument.


  • ASIC invites submissions by 20 June, aim for consolidated instrument before 1 October.

France – AMF MiFID II Asset Management

On 9 May, AMF updated rules regarding transposition of MiFID II.

  • AMF updating rules (instructions, positions and recommendations) to reflect impact
    of transposition of MiFID II, and introduce new regime for asset management firms.
  • Separation of regime of portfolio management firms, from that of investment firms.
  • Portfolio firms cannot just provide the portfolio management service for third party.
  • Must be in addition to its UCITS or AIF management activity, subject to conditions.

Updated Documents

  • AMF updated four documents to reflect this change, DOC-2008-03, on accreditation
    procedure for portfolio management firms, disclosure duties, passport.
  • DOC-2016-01 on procedure for the approval of UCITS depository investment firms,
    the procedures for examining the specifications of other UCITS and AIF depositories.
  • DOC-2009-24 on shareholding change in portfolio management firms, DOC-2017-10
    on prudential valuation of acquisitions, increases in qualifying holdings.


  • Changes from MiFID rules for funds are applicable from 9 May 2018.

China – Foreign Owned Futures

On 4 May, CSRC proposed foreign investments in futures firms.

  • To enhance economic capability and competitiveness of China’s futures industry.


  • A foreign-invested futures company is defined futures company in which single
    or associated foreign shareholder holds more than 5% of the company’s equity.
  • Shareholders must have good international reputation, operating performance.
  • Foreign investors are required, to control over 5% of stock of futures company.
  • Number of senior managers with nationality of People’s Republic of China must
    not be less than one third of the total number of senior management personnel.
  • Contains requirement for the deployment of text language, information system.
  • To make further revisions, publish procedures after publicly soliciting comments.

Malaysia – BML Introduces Intraday Short Selling

On 16 April, BML introduced intraday short selling for investors.

  • Implemented Intraday Short Selling (IDSS) for all investors to boost market liquidity.


  • Exchange has implemented a clear framework, to facilitate IDSS trades for investors.
  • Under framework, investors will be able to sell securities first, and buy the securities
    later within trading day itself. IDSS can be done on selected list of eligible securities.
  • List of approved securities, currently with 280 securities, be reviewed every 6 months.
  • Exchange will continue to undertake initiatives to give more efficient and facilitative
    market framework and the introduction of IDSS is set to further advance the efforts.
  • Robust compliance requirement and safeguards, have also been put in place to allow
    for IDSS trades, including controls for IDSS suspensions if stock price falls over 15%.
  • Framework also specifies compliance obligation requirements for investors before IDSS.
  • To allow investors to carry out IDSS, Exchange has amended Rules of Bursa Securities,
    Directives and Participating Organisations’ Trading Manual, approved by Commission.

India – SEBI FPI Government Limits

On 12 April, SEBI updated FPIs investment limit in government debt.

  • A sub-limit for investment by long term foreign portfolio investors (FPIs) in the
    infrastructure sector was created within corporate debt investment limit (CDIL).

Revised Limits

  • Decided to revise the CDIL and the limit for investment by FPIs in Government
    Securities and State development loans, for the year 2018-19.
  • Limit for FPIs in Central Government securities will be enhanced to INR 207,300
    on 12 April 2018 and INR 223,300 on 1 October 2018 respectively up from existing.
  • Limit for long term FPIs sovereign wealth funds, multilateral agency, endowment
    Funds, etc enhanced to INR 78,700 on 12 April 2018 and INR 92,300 on 1 October .
  • SDL-General to be enhanced to INR 34,800 cr on Apr. 12, 2018 and INR 38,100
    cr on 1 October 2018 respectively, SDL-Long Term to be revised to INR 7,100.
  • CDIL to be enhanced to INR 266,700 cr on 12 April, and INR 289,100cr on 1 October.

E.U. – ESMA Short-Disclosure Impact

On 13 April, ESMA issued study on impact of short-sale disclosures.

  • ESMA study showed the impact of short-selling disclosure on investor behaviour.
  • Analysed net short positions reported under the Short-Selling Regulation (SSR).
  • Published in ESMA’s latest trends, risks, vulnerabilities (TRV) report No. 1, 2018.

SSR Treatment

  • SSR requires public disclosure of net short over 0.5% of company issued shares.
  • Firms must also report to authorities shorts above 0.2%, and each further 0.1%.
  • SSR aims to reduce settlement and other risk on uncovered or naked short-sale.
  • Regulation came into force in 2012 and ESMA, in December 2017, advised on revision.

ESMA 2018 Findings

  • Found 210,341 net short positions were reported, from January 2013 to December 2016.
  • Short positions on over 2,000 European shares, majority being UK and German.
  • ESMA analysis revealed around 1,000 different investors are active in EU shares.
  • Large majority is domiciled in US (40%), UK (30%), and only 15% in rest of EU.
  • Short-selling is highly concentrated, 150 investors account for 80% of positions.
  • Investors avoid crossing public disclosure threshold to keep their strategy secret.
  • Disclosure of large shorts might reinforce herd behaviour in short-sale activities.

E.U. – ESMA Commodity Position Limit

On 9 April, EU ESMA issued opinion agreed position limits per MIFID.

  • Follows ESMA October 2017 opinion on FCA commodity position limits.

2018 Updates

  • ESMA opinions agreed position limit re feed wheat; jet kerosene; and gasoline.
  • Found proposed limits consistent with objectives of MiFID II, and methodology.
  • ESMA will continue to assess notifications received and issue opinions on them.
  • To ensure the position limits are set in accordance with the MiFID II framework.

Commodity Limits

  • MiFID II requires that all commodity derivatives traded on trade venues as well
    as economically equivalent OTC contracts, must be subjected to a position limit.
  • NCAs have to establish position limit with methodology for calculation by ESMA
  • For illiquid contracts, spot and other months’ limits are set by default in RTS 21
    and amount to 2,500 lots, or 2.5mn securities issued for securitized derivatives.
  • Liquid contracts will be given bespoke position limits, set by the relevant NCAs.

Ireland – CBOI Proposes UCITS Regulations Update

On 29 March, CBOI proposed amendments to the UCITS regulation.

  • CBOI undertook to keep UCITS regulations under review, and to update periodically.
  • In the process of the annual review, a number of amendments have been identified.
  • Proposed to incorporate previous amendments into consolidated version of the rules.

Format of Consultation

  • Section I contains details of the amendments, taking account of CBOI 2017 review.
  • Section II on implementation of ESMA’s Opinion to NCAs on Share Classes of UCITS.
  • Section III introduces obligations regarding UCITS charging performance related fee.
  • Section IV sets out amendments, as a result of the MMFR, in force on 20 July 2017.

CBOI Review Amendments

  • Take account of CRR implementation, when assess equivalence of third country bank.
  • Holding of ancillary liquidity applies in case of any single bank, to remove ambiguity.
  • 18-month requirement for first annual audit applies to umbrella UCITS, and subfunds.
  • Remove duplication of requirements, for maintenance of company secretary material.


  • Comments on consultation should be received by 29 June 2018.