FSA Notification Procedure for Short Selling Regulation Exemptions


Article 17 of the EU Short Selling Regulation (EU236/2012) (the Short Selling Regulation) provides for certain exemptions for market-making activities and primary market operations from the requirements to make notifications and public disclosures of net short positions and the restrictions on entering into uncovered short sales under the Short Selling Regulation. This exemption can be used by a person who has made a “legitimate notification” to the relevant competent authority at least 30 days before the exemption is intended to be employed and where the competent authority has not objected to its use. (On September 17, the European Securities and Markets Authority (ESMA) published a consultation paper on guidance on the exemptions under Article 17; see the September 21, 2012, edition of Corporate and Financial Weekly Digest.)

On September 24, the UK Financial Services Authority (FSA) published guidelines for the making of notifications to the FSA in order to obtain market maker and primary dealer exemptions under Article 17. The exemptions apply only to transactions carried out in performance of market-making activities or as authorized primary dealers; they do not apply to other activities carried out by the entity making the notification. Since notification must be made to the relevant regulator 30 days before it is relied on, for an entity to be able to rely on an exemption from November 1 (the date the Short Selling Regulation comes into effect), the FSA must receive any relevant notification no later than October 2.

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On September 26, the FSA published the relevant notification forms. They require detailed information (including name of issuer, type of financial instrument and ISIN code (International Security Identification Number)) for each instrument with respect to which a market maker or primary dealer exemption is notified.

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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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