On 7 July 2017, the European Securities and Markets Authority (ESMA) published its ‘Consultation Paper on the Evaluation of certain elements of the Short-selling Regulation’. The Consultation requests stakeholder feedback regarding ESMA’s technical advice to the European Commission on the review of the EU Regulation No. 236/2012 on short selling and certain aspects of credit default swaps (SSR) which it intends to provide by December this year.

The Consultation has three areas of focus:

1. the scope and functioning of the exemption for market making activities;
2. the procedure for imposing a short term ban on short-selling in the case of a significant fall in price of a financial instrument; and
3. the transparency of net short positions, and related reporting and disclosure requirements.

The latter is of particular interest to AIMA members, with ESMA having been asked by the European Commission to analyse whether the method of notification and disclosure of net short positions is appropriate and whether a more efficient and potentially harmonised mechanism could be developed.  Questions asked by the Consultation cover the thresholds for notifications and disclosures of significant net short positions, the timing of these notifications, the possibility of a centralised mechanism for submitting notifications and the calculation of net short positions for sovereign debt instruments (cash vs derivatives).  ESMA also sets out the merits of a new requirement for NCAs to publish anonymised aggregated net short positions per issuer on a regular basis.

The deadline for responses is 4 September 2017.  If members have any questions or to join the AIMA Short Selling Working Group, please contact Oliver Robinson.