EU Lowers Short Sale Disclosure Threshold

The European Securities and Markets Authority has announced a Decision to lower the threshold for disclosing short positions in shares. Effective March 16, 2020, all holders of net short positions in shares traded on an EU regulated market (i.e., exchange) must notify the relevant national regulator if the position reaches or exceeds 0.1% of the issued share capital. Net short position holders must notify the relevant national regulator of any net short position of 0.1% of the issued share capital of a company and of each 0.1% above that threshold.

The requirement applies to natural or legal persons, regardless of where they are located. It is a temporary three-month measure, designed to assist the EU authorities to monitor market developments in light of the impact of the COVID-19 outbreak on the EU financial markets.

It is not necessary to notify existing positions above the new lower threshold which were not previously notifiable. The lower threshold requirements do not apply to:

• market making activities;
• shares admitted to trading on an exchange where the principal venue for the trading of the shares is located in a third country; or
• a net short position in relation to the carrying out of a stabilization under the Market Abuse Regulation.

View ESMA's Decision.

Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.

You may like to see our client note, "EU regulatory response to COVID-19: ESMA introduces lower short position reporting threshold".

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