General Regulation

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Financial markets & infrastructures Short selling: Presentation

Application of the European regulation on short selling

Published on June 19, 2013

European Regulation 236/2012 on short selling came into force on 1st November 2012. This text established a new European-level harmonised framework and greater transparency of the system applicable to short positions in shares and sovereign debt. The practical terms for reporting net short positions to the AMF are specified in this section.

The three main provisions of the regulation

  1. Regulation 236/2012 establishes European transparency rules on short sales (net short positions). This regime replaces the one that existed in France since February 2011, without changing it substantially.
  2. It strengthens the location requirements concerning securities that are subject to short selling in order to prevent delivery defaults (“locate rule”).
  3. It prohibits the purchase of any sovereign credit default swap(1) (CDS) that does not hedge a correlated exposure.

Reporting obligations

Any natural or legal person who holds a short position equal to or higher than 0.2% of the share capital of a company whose shares are admitted to trading on a European trading venue, if the main market for the share in question is located in Europe, must notify the competent Authority of this position within one trading day.

Short selling on sovereign debtThe net short position transparency system also concerns sovereign debt issued by European Union Member States. The reporting thresholds are provided by the Delegated Regulation of the European Commission. The information collected by the competent authorities is not disclosed.

When the net short position is equal to or higher than 0.5% of the share capital, the competent authority publishes this information.

The same obligation of reporting to and publication by the competent authority applies when one of the successive supplementary thresholds set by 0.1% steps is crossed, either upwards or downwards.

If an entity holding a published net short position crosses downwards the 0,5% threshold, a notification must be sent under the same conditions. The competent authority publishes this downwards crossing notification and, the next day, removes this publication and all the previous related net short position publications.

A file containing the history of the net short positions published by the competent authority - including the ones removed afterwards - can be found on the "combined publications" section. This file is updated periodically.

On its website, ESMA provides a tool to find the competent authority for each company.

Exemptions

Transactions entered into within the framework of market-making activities or as an authorised primary dealer do not fall within the scope of the European Regulation, provided that the person in question has notified the AMF beforehand.

The AMF may prohibit the use of this exemption if it considers that the conditions for its use are not satisfied.

Exemption applications may be addressed by e-mail to the AMF at reportingpositionscourtes@amf-france.org or by post.

AMF net short position reporting terms

Regulation 236/2012 requires each competent authority to take measures to authenticate the identity of declarants. Reports to the AMF must therefore be made in electronic format via the ONDE extranet, the AMF system used for filing regulated information.

The access codes to this extranet system are issued by the AMF to new declarants who so request, after receipt and verification of all necessary information and documents. The list of this required information may be downloaded below.

New declarants may transmit this information to the following address: reportingpositionscourtes@amf-france.org.

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