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

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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.

A copy of the Opinion issued by ESMA can be found here.

A discussion of the first renewal of the ban on July 6, reported in the Corporate & Financial Weekly Digest edition of July 10, can be found here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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