Wed, Apr 22, 2020

ESMA Issues Positive Opinions on Proposed Extensions of Short Selling Bans

On April 15, 2020 the European Securities and Markets Authority (ESMA) issued positive opinions on the proposed extension of existing short selling bans by a number of National Competent Authorities (NCAs). The bans will be extended until May 18, 2020 and will come into force on:

  • April 16, 2020 for the Austrian Finanzmarktaufsicht (FMA); 
  • April 17, for the French Autorité des Marchés Financiers (AMF) and the Belgian Financial Securities and Markets Authority (FSMA);
  • April 18, 2020 for the Spanish Comisión Nacional del Mercado de Valores (CNMV); and
  • April 25, 2020 for the Hellenic Capital Market Commission (HCMC).

The current ban imposed by the Italian Commissione Nazionale per le Società e la Borsa (CONSOB) is already in force until June 18, 2020 so it did not require an extension.

The ESMA also notes in its announcement that the:

  • Restrictions apply to trading on relevant venues for which the above NCAs have competence and are to related instruments relevant for the calculation of net short positions;
  • Measures may be lifted before the deadline or may be further extended, depending on market conditions; and
  • Short selling bans apply to both transactions executed on a trading venue and over the counter.

The measures do not apply to:

  • Market making activities; and
  • Index-related instruments or baskets of financial instruments if the shares covered by the ban represent 50% or less of the index or basket weight. 

Firms should note that this exclusion has been harmonized across the above NCAs which, in their initial bans issued in March, applied different weight thresholds to their index and basket exclusions.

The ESMA’s announcement, which contains links to the individual opinions, can be found here.

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