Short Selling Regulation: ESMA Submits Technical Advice on Possible Amendments

The European Securities and Markets Authority (ESMA) has published its final technical advice to the European Commission (EC) on how to improve the Short-Selling Regulation (SSR) (236/2012 – SSR). The advice has been issued under a mandate from the EU Commission and follows a consultation launched in July 2017.

ESMA has proposed a number of amendments on controversial areas of the SSR, with the intention to improve its relevance, effectiveness, coherence, and efficiency. 

The amendments relate to:

  1. the exemption for market making activities – including proposals to change the definition of ‘market making activities’ to include the different types of on-venue market making activities described in MiFID2, and introducing market maker reporting obligations;
  2. short-selling bans – including a proposal to change bans on short selling into a ban on entering into or increasing net short positions, as well as new rules on competent authorities adopting short-term bans; and
  3. transparency of net short positions – including a proposal for a centralised notification and publication system across Europe.

The SSR lays down a common regulatory framework regarding the requirements and powers relating to short selling and ensures greater coordination and consistency between Member States. The SSR aims to enhance transparency, reduce certain risks associated with short selling and ensure a common regulatory approach across Member States.

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