On December 21, 2017, the European Securities and Markets Authority (ESMA) published a final report containing technical advice to the European Commission (EC) on the evaluation of certain elements of the Short Selling Regulation (SSR) that became effective on November 1, 2012.

This follows the formal mandate from the EC to ESMA on January 19, 2017, seeking the latter’s technical advice on the evaluation of certain elements of the SSR, and ESMA’s consultation (published on July 7, 2017) (consultation paper) on the evaluation of the SSR. In its final report, ESMA proposes a number of key amendments to what it describes as the SSR’s “controversial areas,” with the aim of improving the SSR’s relevance, effectiveness, coherence and efficiency. ESMA also notes that it received limited feedback to its consultation paper, to which only 20 public responses and four confidential responses were submitted.

ESMA has relied in part on the analysis of concepts derived from the revised Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR), in developing its final report of technical advice.

Annex II of the final report sets out ESMA’s technical advice and includes proposals concerning the three main elements of the mandate received from the EC:

• Exemption for market-making activities;
• Short-term restrictions on short-selling in case of a significant decline in prices; and
• Transparency of net short positions and reporting requirements.

ESMA states that the technical advice in its final report will contribute to the actions listed in the EC’s communication published in November 2016 on the follow-up to its call for evidence on the European Union regulatory framework for financial service.

A copy of the final report is available here.

A copy of the communication is available here.