Brussels, 29 June 2012
Short selling: Commission adopts technical standards
The European Commission has today set out the detailed rules aimed at reducing the risk of settlement failures linked to naked short selling, as well as the means by which market participants should disclose significant short positions to the market. The technical standards adopted today by the Commission are based on the work of the European Securities and Markets Authority (ESMA). They notably specify the details of the so-called "locate rule," which ensures that short sales do not result in a failure to deliver. The new rules also detail how ESMA is to determine the shares which are exempt from the Short Selling Regulation1 by virtue of their principal trading venue being outside the Union. Together with the Short Selling Regulation that they implement, the regulations adopted today will create a more transparent, orderly and stable market by reducing the risks tied to short selling.
Internal Market and Services Commissioner Michel Barnier said: "The new rules give public authorities and market participants legal certainty on the detailed requirements which short sellers must comply with to adequately ensure the settlement of shares or sovereign debt when this is due. The technical requirements on how to disclose significant short positions are also set out, so that market participants can prepare to apply the Short Selling Regulation as of 1 November 2012."
The Implementing Regulation details technical rules on the following issues to ensure the consistent application of the Short Selling Regulation:
The Implementing Regulation is part of a package of four implementing measures that the Commission will adopt to specify technical aspects of the Short Selling Regulation. A Delegated Regulation on regulatory technical standards was also adopted by the Commission today, based on draft regulatory technical standards submitted by ESMA. This sets out the details of the information on short positions that must be notified to competent authorities and disclosed to the public. It also specifies what information competent authorities must report on a quarterly basis to ESMA, and the method of calculation of turnover for ESMA to determine the principal trading venue of shares.
The Implementing Regulation will enter into force on the day following its publication in the Official Journal of the European Union and shall apply from 1 November, except for the provisions on the principal trading venue, which shall apply from the date of entry into force.
The Delegated Regulation on regulatory technical standards is subject to a one-month objection period by the European Parliament and the Council, which can be extended by one month, and will only enter into force, provided that neither co-legislator objects, at the end of this period and the day following publication in the Official Journal.
In order to fully implement the Short Selling Regulation, two final measures – a Regulatory Technical Standard and a Delegated Act – are expected to be adopted shortly.
See also MEMO/12/508
Short Selling Regulation and text of the Implementing Regulation