The Short Selling Regulation (SSR) requires that firms notify the regulator – or disclose to the market – if they hold short positions over a certain threshold. Naked short-selling of shares is effectively banned, as is the sale of ‘naked’ Credit Default Swaps related to sovereign debt (i.e. where these are held other than the purposes of hedging). Finally, the Regulations harmonise the powers available to national regulators to restrict short selling in certain circumstances, and also provide ESMA with controversial emergency powers allowing them to act in Member States directly.
The Short Selling Regulation (SSR) (263/2012) in force and effective (since 1 November 2012).
This is a monitoring report with news about regulatory developments in the Investment and Funds sector (covering EU, international and UK developments).
PDF table of Commission proposals on financial services regulatory reform.
The practice of short selling (selling shares or other instruments without owning them) by hedge funds and others shot into political and public awareness in the immediate aftermath of the banking crisis. Speculators were blamed for short selling banks heavily, betting on a fall in their share prices and in the process, it was argued, rendering such falls inevitable.
PDF briefing on BaFin decrees banning certain short sales and credit default swaps.
There are wide ranging reviews underway of the Markets in Financial Instruments Directive (“MiFID”). This is one of the key pieces of EU legislation on financial markets, along with the Market Abuse Directive (“MAD”), which is also subject to review - considered below - (and the Prospectus, Takeover and Transparency Directives).
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