• Follows FR AMF November 2021 issued guidance on EU short selling regulation.

Overview

• The EU Short Selling regulation (VAD) provides for notifications to the regulator and to the market of net short positions accumulated above certain set thresholds.
• So, when market participant crosses 0.1% threshold must notify position to regulator.
• It must then notify any crossing of additional successive thresholds in increments of 0.1% whether upwards/downwards; declaration must be made within 1 trading day.
• As soon as net short position is equal to/greater than 0.5% of capital, regulator makes information public; failure to comply with reporting obligation is subject to penalties.
• So FR AMF encourages market participants to notify any anomalies they come across.

Example

• FR AMF recently closed an investigation as it took into account the diligent behavior of the participant in determining the action to be taken.
• As anomalies were insignificant, almost all were below 0.5% threshold re publication AMF took into consideration fact interested party approached regulator spontaneously.
• Also its involvement, active cooperation in investigation, definition, implementation of remedial measures to ensure anomalies observed do not recur in the future.
• Per context, mentioned elements, FR AMF decided to send simple letter of observations to participant concerned, reminding of importance of compliance with regs in this area.

Recommendation

• FR AMF encourages players to adopt same behavior namely to notify identification of anomalies in reports of net short positions submitted and collaborate actively with it.
• That is, collaboration in implementation of corrective actions and remedial measures.