July 13, 2020

Volume X, Number 195

July 10, 2020

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FCA Changes Short Selling Reporting Process

On February 24, the UK’s Financial Conduct Authority (FCA) announced a change to the process firms should use to report short positions in UK-listed financial instruments under the Short Selling Regulation 2012 (SSR). The change was announced on an updated webpage, available here.

Previously, firms could report short positions to the FCA by submitting a notification form via email. Now, firms have to submit that notification through an online portal called ESS, and therefore must have an ESS account prior to filing any SSR reports.

Each notification form will need to be accompanied by an authorization letter. This letter, prepared on the firm’s letter head, should state which individuals have permission to submit notifications on behalf of the firm, and should be signed by an individual who has the authority to give that permission.

The thresholds for short selling reporting have not changed. For equities admitted to trading on a UK or EU trading venue, a private disclosure to the regulator must be made when the net short position reaches 0.2 percent of the issued share capital of the company, and for each incremental 0.1 percent change thereafter.

A public disclosure (which is published on the FCA’s website) must be made when the net short position reaches 0.5 percent and for every 0.1 percent increment thereafter. Certain shares are exempt if the principal trading venue is located in a third country, as listed here.

The thresholds for net short positions in sovereign debt and positions in uncovered sovereign credit default swaps vary depending on the issuer, and are set out in a spreadsheet maintained by the European Securities and Markets Authority (ESMA) here. The SSR does not apply to corporate debt.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 59

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About this Author

John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

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 and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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