AIMA

Short Selling Bans

Europe

In August 2011, by a co-ordinated act, the national regulatory authorities in France, Belgium, Italy and Spain introduced temporary bans on short positions in the stock of specified financial institutions within their respective jurisdictions.  Among other matters, the restrictions, which were to some degree harmonised:

· prohibited the creation of new net short positions;

· prohibited the increase of existing net short positions; and

· included intraday positions.

The national regulatory authorities of the above states have now lifted their respective restrictions, subject to certain additional requirements. All now demand reporting of significant net short positions, with Belgium, Italy and Spain imposing an additional ban on naked positions and France a T+3 settlement requirement.

The above restrictions are in addition to the existing bans in Greece.

 

Relevant documents

ESMA Update on Competent Authority Short Selling Bans (November 2011)

AIMA documents

Summary of the EU short selling restrictions (August 2011)

Belgium

FSMA Modifies Short Selling Rules (February 2012)

FSMA FAQ on Short Selling (February 2012)

FSMA Amends Short Selling Rules (August 2011)

FSMA Amends its FAQs on Short Selling (August 2011)

France

End of short selling ban regarding French securities in the financial sector (February 2012)

Extension of the ban on the taking of net short positions in ten French securities of the financial sector (November 2011)

FAQs on Short Selling Ban (September 2011)

Assessment of the impact upon the markets of the Decision of 11th August 2011 prohibiting net short position regarding ten French securities of the financial sector (September 2011)

Greece

Guidance on HCMC's decision regarding short selling ban (August 2011)

Italy  

CONSOB Newsletter – 27 February 2012 – Italy Lifts Short Selling Ban (February 2012)

CONSOB FAQs on the prohibition to take or increase net short positions(updated 12 January 2012)

CONSOB Press Release - Extension of Short Selling Restriction until 24 February 2012 (11 January 2012)

CONSOB Resolution No. 18060 - Extension of restrictive measures on net short positions on shares of the financial sector (11 January 2012)

CONSOB Resolution No. 17993 - Measures on short sales aiming at ensuring the orderly conduct of trading and the integrity of the markets (November 2011)

CONSOB Resolution No. 17992 - Extension of measures on reporting obligations of net short positions on shares and of restrictive measures on net short positions on shares (November 2011)

CONSOB Resolution No. 17902 - Restrictive measures on net short positions on shares (August 2011)

CONSOB resolution No. 17862 - Measures on reporting obligations of net short positions on shares (July 2011)

Spain

FAQs on Short Selling Ban (September 2011)

Temporary Extension of Short Position Ban  (September 2011)

Extension of Short Selling ban  (August 2011)

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Asia-Pacific

South Korea

Article 180 of the South Korean Financial Investment Services and Capital Markets Act, prevents the making of sales of listed securities (i.e.,) where either the person concerned does not own the security or where there is an intention to settle the account by borrowed securities.

Listed securities means:

• convertible bonds, bonds with warrant, participating bonds or exchangeable bonds;
• equity securities;
• beneficiary certificates;
• derivative-combined securities; or
• securities depository receipts - limited to those related to securities of a type referred to above.

However, a sale is not regarded as being short when:

• listed securities for which a purchase contract was made are sold before the settlement date;
• stocks that will be acquired by exercising a right of convertible bonds, exchangeable bonds, bonds with warrant, etc. are sold and it is possible to settle the account because the stocks will be listed by the settlement date; and
• there is otherwise no possibility of failing to perform the settlement.

Limited exemptions are permitted under Article 180 “in order to maintain the stability of the securities exchange and form a fair market price” – these are set out in Article 208 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (referred to within Article 180 as the Presidential Decree).

Key legislative documents

Securities Laws