News Flash: EU Regulators Lower Short Reporting Limit From 0.2% to 0.1%

News Flash: EU Regulators Lower Short Reporting Limit From 0.2% to 0.1%

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Today, the European Securities and Markets Authority (ESMA) issued a decision temporarily lowering the notification thresholds of net short positions in relation to EU listed equities.

The previous limit of 0.2% has been lowered to 0.1% of the issued share capital of EU listed equities, with immediate effect and lasting for a period of at least three months. The first disclosure at the revised limits will therefore be required tomorrow, Tuesday 17 March, in relation to trading position as at the end of the trading day on Monday 16 March. All reports must be made on a T+1 basis with the deadline being 3:30 p.m. local time in the jurisdiction in question (which in most cases will be GMT or GMT+1).

This change affects all firms globally, including U.S. managers, to the extent that they take short positions in EU-listed issuers. Where firms have existing procedures for notifying EU regulators of short positions, this change will only require a minor adjustment to the calculation methodology and an increased volume of notifications. However, for firms that have not previously needed to make EU short-selling notifications, this change may in some cases suddenly and unexpectedly draw them within the scope of a new obligation, requiring procedures to be put in place at short notice. Since each regulator has its own notification system, firms may also need to register at short notice to gain access to the relevant system to make the reports.

This announcement is in addition to the short-selling restrictions announced last week by Spanish and Italian authorities in relation to certain listed issuers in each jurisdiction, as well as similar but more stringent measures taken in South Korea to prohibit all short selling for a period of six months.

Please contact us if you require further assistance in relation to this matter.

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Darren Mooney

Partner and Co-Head of Business Development

Darren Mooney is a Partner and the Co-Head of Business Development at Greyline. Before joining Greyline, Darren served as deputy chief compliance officer of Partner Fund Management where he held primary responsibility for the compliance program of the second-largest hedge fund in the Bay Area. Prior to that, Darren spent five years providing compliance consulting services at Cordium and then ACA Compliance Group, where he led the company’s San Francisco office and west coast operations. In addition to providing ongoing consulting services to a variety of investment managers, including hedge fund, private equity, venture capital, real estate, quantitative and other wealth managers, Darren also regularly guided clients through the SEC registration process, implemented tailored compliance programs, supported clients’ live SEC exams, and served as an SEC-mandated independent compliance consultant following an SEC enforcement action. Darren’s other experience includes serving as deputy chief compliance officer and associate counsel at F-Squared Investments where he directly supported the compliance program during the investigation and subsequent enforcement regarding historical advertising practices. Darren has a B.S. in Economics from the University of Delaware and a J.D. from Suffolk University Law School. He is a member of the Massachusetts bar.

Annie Kong

Partner and Head of Venture Capital
Annie Kong is a Partner and Head of the Venture Capital Division at Greyline. She provides ongoing compliance consulting to investment advisers and manages client relationships. Prior to joining Greyline, Annie was part of compliance and operations at a long-only manager-of-managers that advised pension fund clients. While there, she conducted compliance and operational due diligence on SEC-registered investment advisers on the platform. She also oversaw and counseled on various legal matters across the firm. Annie has a B.A. in Economics from the University of California, San Diego, and a J.D. from the University of San Diego School of Law. She is an active member of the State Bar of California.
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