ESMA Recommends Permanently Lowering the Reporting Threshold for Net Short Positions to 0.1 Percent
On May 20, the European Securities and Markets Authority (ESMA) proposed to the European Commission (Commission) a permanent reduction to the threshold to notify net short positions on shares to EU national competent authorities (NCAs) from 0.2 percent to 0.1 percent.
ESMA states that it examined the evidence obtained following its successive emergency decisions, which began in March 2020, to temporarily lower the notification threshold to 0.1 percent.
ESMA’s analysis showed that a substantial amount of additional and essential information became available to NCAs through the reporting of net short positions at a threshold of 0.1 percent. This additional transparency of the actual level of net short positions established in the market provides an improved ability by NCAs to conduct market oversight. ESMA therefore considers it necessary to permanently lower the reporting threshold to 0.1 percent.
The Commission may adopt a delegated act amending the notification threshold in Article 5(2) of the Short Selling Regulation.