ESMA Updates its Short-Selling Regulation (SSR)

On Monday ESMA updated its Short-Selling Regulation (SSR) Q&As, revising a previous answer on locate arrangements.

In their updated text ESMA has outlined additional conditions that need to be met for “easy-to-borrow or purchase list” to qualify as an “easy to borrow or purchase confirmation” for the purposes of ‘standard same day locate arrangements’ and ‘easy to borrow or purchase locate arrangements’.

In its revised answer ESMA specifies that an “easy-to-borrow or purchase list” of shares cannot be considered a valid locate arrangement according to Article 12(1)(c) of the Regulation without meeting additional conditions, including:

  • Providing “an easy to borrow or purchase confirmation” of the quantity of shares;
  • Providing a confirmation that the requested number of shares have been put on hold. Additionally an “easy-to-borrow or purchase list” must contain an assessment of the maximum amount of shares potentially affected by the short sale and the prevailing market conditions at the time in particular the liquidity of the shares involved as well as any other information that has an impact on the supply of share to be considered an “easy to borrow or purchase confirmation”

ISLA will consider the impact of these changes in more detail and update members firms in due course.

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