Overview
Last March, the European Securities and Markets Authority (“ESMA”) lowered the initial disclosure threshold for net short positions in shares under the EU Short Selling Regulation to 0.1% (from the usual 0.2%) of the issued share capital. This emergency measure was first introduced due to the increased market volatility resulting from the onset of the COVID-19 pandemic and was renewed by subsequent decisions published by ESMA in June, September and December 2020.
On 15 March 2021, ESMA announced[1] that it would allow its latest renewal decision to expire. The final trading day on which the 0.1% threshold applies is 19 March 2021. Net short positions held on that day must be notified on a T+1 basis by 3.30 pm on 22 March 2021. Thereafter, position holders should revert to reporting only if their net short positions reach or exceed 0.2%.
By contrast, net short positions in relation to UK-listed shares will continue to be subject to the initial threshold of 0.1% until further notice. Following the end of the Brexit transition period, new regulations[2] took effect in the United Kingdom amending the initial disclosure threshold generally to 0.1%. Notifications in the United Kingdom are made through the Financial Conduct Authority’s Electronic Submission System. The database of UK-listed shares subject to the reporting obligations can be accessed here.
The initial public disclosure threshold for net short positions in both EU and UK-listed shares remains at 0.5%.
Authored by Anna Maleva-Otto and Olivia Cork.
If you have any questions concerning this Alert, please contact your attorney at Schulte Roth & Zabel or one of the authors.
[1] ESMA’s announcement, available here.
[2] Short Selling (Notification Thresholds) Regulations 2021, available here.
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