COVID-19: ESMA requires net short position holders to report positions of 0.1% and above

ESMA issued a decision ​temporarily requiring the holders of net short positions in shares traded on an EU regulated market to report positions of 0.1% and above. Net short positions holders must notify the relevant national competent authority (NCA) if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision. 

ESMA considers that lowering the Short Selling Regulation reporting threshold is a precautionary action that, under the exceptional circumstances linked to the ongoing Covid-19 pandemic, is essential for authorities to monitor developments in markets. The measure applies immediately (for a period of 3 months), requiring net short position holders to notify NCAs of their relevant positions as at the close of the trading session on Monday 16 March 2020. The temporary transparency obligations apply to any natural or legal person, irrespective of their country of residence. They do not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.

ESMA recommends action by financial market participants for COVID-19 impact​​

​​​Following discussion of the market situation and contingency measures taken by supervised entities in respect of Covid-19, ESMA has made the following recommendations to financial market participants:

  • Business Continuity Planning – All financial market participants, including infrastructures should be ready to apply their contingency plans, including deployment of business continuity measures, to ensure operational continuity in line with regulatory obligations
  • Market disclosure – issuers should disclose as soon as possible any relevant significant information concerning the impacts of COVID-19 on their fundamentals, prospects or financial situation in accordance with their transparency obligations under the Market Abuse Regulation
  • Financial Reporting – issuers should provide transparency on the actual and potential impacts of Covid-19, to the extent possible based on both a qualitative and quantitative assessment on their business activities, financial situation and economic performance in their 2019 year-end financial report if these have not yet been finalised or otherwise in their interim financial reporting disclosures
  • Fund Management – asset managers should continue to apply the requirements on risk management, and react accordingly

ESMA, in coordination with NCAs, continues to monitor developments in financial markets as a result of the Covid-19 situation and is prepared to use its powers to ensure the orderly functioning of markets, financial stability and investor protection.​

For more information on this topic please contact any member of A&L Goodbody's Asset Management and Investment Funds team.

Date published: 16 March 2020