ESMA: Proposal for mandatory reporting of net short positions

Jun 9, 2021 Benn-Ibler Rechtsanwälte

In March 2020, in response to the Corona pandemic, the European Securities and Markets Authority (ESMA) tightened the reporting requirement for net short positions in relation to a company's issued share capital. This obligation now applied to positions amounting to 0.1% (instead of 0.2% previously) of the issued capital and expired in March 2021.

This measure was taken in view of the fact that the future market development remained uncertain due to the tense economic situation in the European Union (EU). This is because increasing net short positions could have further shaken an already fragile market environment. The main aim of the reporting requirement was therefore to prevent downward spirals. All shares listed on a regulated market in the EU were affected. If the net short position reached, fell below or exceeded 0.1%, this had to be reported to the national supervisory authority - in Austria (Vienna Stock Exchange) the Financial Market Authority (FMA).

ESMA now recommends that the European Commission (EC) permanently reduce the threshold for reporting net short positions in shares to national competent authorities from 0.2% to 0.1%.

An analysis by ESMA showed that a significant amount of additional and material information was available to national supervisors through the reporting of net short positions at the 0.1% level. This had made more efficient market supervision possible. For this reason, ESMA considers it essential to permanently lower the reporting threshold from 0.2% to 0.1% in the future.

Due to the continuing uncertainties in the financial markets, ESMA proposes that the EC adopt the relevant legal acts as soon as possible.

ESMA70-156-4262 (13.05.2021)