Financial Services Monthly Update on Regulatory Developments - November 2012: Part A – Regulation of Financial Markets


In This Issue:

- Short Selling Disclosures and Restrictions Under EU Regulations

- Short Selling Bans Introduced by Individual EU Member States

- Mandatory Central Counterparty Clearing of OTC Derivatives Under EU Regulations

- Review of the Market Abuse Directive

- Excerpt from Short Selling Disclosures and Restrictions Under EU Regulations:

The European Parliament has adopted final Regulations on short selling of shares and sovereign debt and various sets of related technical standards. The Regulations applied on 1 November 2012 and have direct effect throughout the EU. The Regulations introduce: (i) mandatory disclosure of net short positions to the regulator; (ii) restrictions on naked short selling; (iii) a prohibition on uncovered positions on sovereign credit default swaps and (iv)regulator powers to impose temporary restrictions during stressed markets. Firms must disclose to the regulator a net short position in shares or sovereign debt when the position reaches or falls below a relevant notification threshold. Derivative positions are included. The relevant thresholds are 0.2% (when the firm must make a private notification to the regulator) and 0.5% (when the firm must make a disclosure to the regulator which the regulator makes publicly available), in each case measured as a percentage of the issuer’s total issued share capital.

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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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