June 25, 2019

June 24, 2019

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ESMA Confirms Renewal of Short Selling Ban by Greek HCMC and Market Making Exemption

On August 3, the European Securities and Markets Authority (ESMA) issued an official opinion (Opinion), agreeing to renew for a further four weeks the emergency short selling prohibition originally imposed by the Hellenic Capital Market Commission (HCMC) on June 29. The original ban was imposed under Regulation (EU) No 236/2012 of the European Parliament and Council on short selling and certain aspects of credit default swaps. The ban was renewed by ESMA on the 6th, 13th, 20th and 27th of July. The renewed ban took effect on August 4, and will close at 12:00 a.m. CET on August 31. The original and renewed bans place a temporary prohibition on transactions in any financial instrument that creates, or increases, a net short position on any of the shares admitted to trading on the Athens Exchange and the Multilateral Trading Facility of EN.A (Alternative Market of the Athens Exchange). The original and renewed bans apply to any person, regardless of their country of residence.

Also on August 2, the HCMC reopened the ATHEX regulated market, the Multilateral Trading Facility of EN.A, the Electronic Secondary Market (HDAT) for government bonds and restarted settlement operations of the Hellenic Central Securities Depository of securities traded in Greek regulated markets.

The current renewal of the short selling ban differs from the previous restrictions as it includes an exemption for market making activities, provided that any short positions are entered into for hedging purposes. ESMA justified the addition of the exemption in the Opinion, noting that because the Greek financial markets are now open, market making activities provide important liquidity for the Greek shares and for any warrants, derivatives, index derivatives and ETF related to Greek shares.

ESMA stated in the Opinion that they had further renewed the ban because adverse developments continue to exist that can threaten the confidence in the Greek market. ESMA further stated that such ban is an appropriate and proportionate action.

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
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Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

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