ESMA Securities and Markets Stakeholder Group offers advice on short selling

The SMSG discussed the need for regulatory coordination and the need for a fundamental reflection on the use of short selling bans in its Own Initiative Report II on Covid-19 related Issues of 29 June 2020, and also discussed short selling in its own initiative overview report on Wirecard.

The SMSG has acknowledged the important role of short selling in price discovery, market efficiency and liquidity provision, even if there are different views on whether short selling bans in the Covid-crisis were counterproductive or useful. There is broad support for common interpretations of applicable rules, based on which NCAs may issue short selling bans, and a common interpretation of what constitutes short selling.

Against this background, the SMSG welcomes the ESMA Paper on the Review of Certain Aspects of the Short Selling Regulation (“the Consultation”) which will be followed by a report to the Commission on sug- gested improvements to the SSR framework.

The full document is available at https://www.esma.europa.eu/sites/default/files/library/esma22-106-3734_smsg_advice_ssr.pdf

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