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.