E.U. – ESMA Advises Short-Selling Rules

E.U. – ESMA Advises Short-Selling Rules

On 21 December, ESMA issued advice to EC on elements of short-sales.

  • Proposed amendments for controversial areas of short-selling regulation (SSR).
  • Aims to improve relevance, effectiveness, coherence, and efficiency of the SSR.
  • SSR lays down common regulatory framework for powers on short sales, CDS.
  • Aims to ensures greater coordination and consistency between Member States.
  • Enhance transparency, reduce certain risks, and common regulatory approach.

Market Making Exemption

  • Proposes will include addition of the different types of on-venue market making
    activities described in MiFID II within the definition of ‘market-making activities.
  • Market makers only need to be member or participants, of only one of the trade
    venues where market-making activity takes place, do not need for all of them.
  • Do not require any membership requirements, for OTC market-making activity.
  • ESMA also suggested introducing new reporting obligations for market makers.

Bans on Short-Selling

  • Recommended only authority of most relevant market to impose ban across EU.
  • Transform current short sale bans into entering or increasing net short positions.

Transparency of Short Positions

  • Improvements building a centralized notification and publication system for EU.
  • ESMA supported requiring the LEI, for identification of certain position holders.