On 4 December 2023, in an open letter to the European Commission (EC), the Managed Fund Association(MFA) recommended targeted reforms to the EU short selling regulation.

• Open letter is in response to EC's call of evidence on short selling regulation
• Short selling is an essential tool that improves market efficiency, helps uncover corporate fraud, and enables greater risk management
• Current EU SSR framework hampers the potential advantages of short selling in the EU

Proposed Reforms

• Replacing the existing individual public disclosure of short positions with aggregated public disclosure of net short positions
• Creation of a centralized portal for short sale reporting

Support for Reforms

• Research has found that publicly disclosing individual manager short positions limits short selling activity, causes herding behavior, and increases market volatility.
• Managers currently face a burdensome process where they submit positions on portals in individual member states with different calculation methodologies.
• Empirical evidence suggests that short selling bans fail to achieve their intended objective and instead harm investors through reduced liquidity, higher transaction costs, and distortion of price discovery.
• Alternative asset managers invest heavily in European markets, including in EU-listed shares and EU sovereign debt, and provide valuable trading flows and liquidity to EU trading venues and counterparties.