• AUT FMA reported on lowered EC notification threshold for net short positions.
• Follows EC September 2021 adopted regulation on notification threshold.
• Also follows ESMA May 2021 proposed permanently lowering threshold.
• Also follows ESMA September 2021 consultation to review short sale rules

Overview

• Reporting threshold for net short positions permanently lowered from 0.2% to 0.1%.
• Existing positions between 0.1% and 0.2% must be reported when reduction applies.
• Affects shares listed on a regulated market in the EU; general reporting obligation for holders of net short positions is reduced to 0.1% of the nominal value issued.
• The reporting threshold does not apply to shares whose main trading venue is in a third country outside the EU, as well as to market making or stabilization transactions.
• Positions are reported to the national supervisory authority responsible for the market.
• ESMA to publish more details on how net short positions are to be reported.

Reason for Change

• Instability due to Covid-19 led regulators and ESMA to take extraordinary short-selling measures more frequently with risk of retail investors engaging in short squeezes.
• This highlighted the importance of constantly collecting information about significant net short positions in stocks, as information is critical for market surveillance purposes.
• EC believes uncertainties about statutory reporting requirements should be avoided and that there should be stability in the rules and obligations in this regard.
• Decided best way to achieve stability is to permanently lower the reporting threshold. Preferable to temporary thresholds, due to uncertainty as expiration date approaches.