EU Short Selling Bans Prolonged – Finance and Banking



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This alert was updated on March 19, 2020, following
distribution on March 18, 2020, to include information in relation
to Austria.

Further bans on all types of short selling have been extended by
financial regulators in Austria, Belgium, France, Greece, Italy and
the UK (in respect of the shares identified by the Spanish and
Italian regulators) and now prohibit the creation of new and the
increase of existing net short positions (including intraday net
short positions), whether through derivative instruments, American
depository receipts (ADRs)/Global depository receipts (GDRs),
baskets or indices composed mainly or significantly of the shares
affected by the prohibitions. The prohibitions continue to allow
the exemption for market making. Where the scope of the
prohibitions is determined with respect to the relevant EU
regulator being the reference authority for the submission of the
net short position disclosures (see Belgium and France), the
position can be confirmed with reference to the Financial
Instruments Reference Data System maintained by the European
Securities and Markets Authority (ESMA), accessible here.

Austria: The Austrian Financial Market
Authority (FMA) issued a regulation on March 18, 2020, temporarily
prohibiting the short selling of all shares that are admitted to
trading on the Regulated Market of the Vienna Stock Exchange
(Wiener Börse) for which the FMA acts as the supervisory
authority. The prohibition excludes transactions by market makers.
In addition, the prohibition does not apply to transactions in
financial instruments that are based on an index or a basket of
securities, which track an index. The ban entered into force on
March 18, 2020 and is expressed to stay in place for one month. The
announcement with a link to the German-language regulation is
available here.

Belgium: The prohibition on short selling by
the Financial Services and Markets Authority (FSMA) includes
“any transaction which creates, or relates to, a financial
instrument and the effect or one of the effects of that transaction
is to confer a financial advantage on the natural or legal person
in the event of a decrease in the price or value of another
financial instrument” and takes effect today, on March 18,
2020, and will continue until April 17, 2020. The measure is
applicable to all companies listed on Euronext Brussels and
Euronext Growth where the FSMA is the national competent authority
for the most relevant market (MRM). The prohibition applies to
index-related instruments only if the restricted shares represent
more than 20 percent of the index weight. The text of the
resolution is available here.

France: The Autorité des marchés
financiers’s (AMF) decision prohibits all the creation of a
net short positions and any increase of existing net short
positions in the share capital of any issuer whose shares are
admitted to trading on a French trading venue and for whom the AMF
is the relevant competent authority within the meaning of the EU
Short Selling Regulation. The prohibition takes effect today, on
March 18, 2020, and will continue until April 16, 2020. The
creation or increase of net short positions through indexed
financial instruments or baskets of shares are excluded from the
ban when the shares subject to the decision represent less than 50
percent of the composition of the index or basket. The text of the
decision is available here, and of the extension here.

Greece: The Hellenic Capital Market Commission
(HCMC) has prohibited all short sales and other transactions which
create, or increase the net short positions in shares admitted to
trading on the regulated market of the Athens Stock Exchange, for
which the competent authority is the HCMC. The temporary
prohibition takes effect today, March 18 until April 24, 2020. The
decision of HCMC is available here.   

Italy: The Commissione Nazionale per le
Società e la Borsa’s (CONSOB) temporary prohibition
bans the creation of new net short positions and increases to
existing net short positions in any of the shares specified in the
decision. The temporary prohibition does not apply to the trading
of index-related instruments, provided that the affected shares
included in do not represent more than 20 percent of the index
weight. CONSOB’s FAQ 9 includes a discussion of the impact on
the trading of index-related instruments. In addition, the
restrictions do not apply to the creation of, or increase in, net
short positions in shares affected by the prohibition when the
short position is aimed exclusively at hedging against the risks
associated with the equity component of previously purchased
convertible bonds which convert into the affected shares.
Similarly, the prohibition does not apply to a hedging short
transaction in shares affected by the prohibition where the risk
arises from previously purchased subscription rights which give the
right to subscribe to the affected shares (yet to be issued). The
prohibition is effective from the start of the trading day today,
March 18, 2020, until the end of the trading day of June 18, 2020.
The restrictions could be lifted before June 18, 2020, subject to
market conditions. The decision and the associated FAQ are
available here.

UK: The Financial Conduct Authority (FCA)
confirms that it applies the temporary prohibitions issued by
Italy’s CONSOB and Spain’s Comisión Nacional del
Mercado de Valores (CNMV) in accordance with the specifications of
those prohibitions set out above. The FCA’s announcement is
available here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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