The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today launches a consultation paper (CP) on the review of the Short Selling Regulation (SSR).
The CP sets out suggestions for operational improvements and policy clarifications on:
- the calculation of net short positions, the prohibition of uncovered short selling and the locate rule under which short selling trades can take place;
- the mechanism for transparency of net short positions and the proposal to publish aggregated net short positions per issuer based on all individual positions and the scope of the exemptions for shares that are more heavily traded in a third country; and
- the introduction of a centralised notification and publication system to reduce reporting burdens, increase cost efficiency and foster ESMA’s monitoring capacity and coordination powers in case of potential threats at EU level.
The CP also contains an empirical analysis of the impact of the short selling bans adopted after the COVID-19 outbreak, with reference to the effect of the bans on liquidity and volatility, concluding that current intervention powers remain a useful tool in case of developments impacting the resiliency of financial markets.
Next steps
ESMA will consider the responses it receives to this consultation paper by 19 November 2021 and expects to publish a final report by the end of Q1 2022. This CP will primarily be of interest to issuers of financial instruments admitted to trading or traded on a trading venue, investment firms, market makers, primary dealers, persons who engage in short sales or transactions resulting in net short positions.