On 15 February 2012, ESMA published a consultation paper on its draft technical advice to the European Commission on possible delegated acts regarding the EU regulation on short selling and certain aspects of credit default swaps. ESMA’s draft technical advice includes advice on the following:
- the definition of when a natural or legal person is considered to own a financial instrument for the purposes of the definition of short sale;
- the net position in shares or sovereign debt, covering the concept of holding a position, when a person has a net short position and the method of calculation of such a position, including cases when different entities in a group have long or short positions or for fund management activities related to separate funds;
- what constitutes a significant fall in value for various financial instruments: the consultation paper also contains consultation on a regulatory technical standard on the method of calculation of the fall in value of a financial instrument; and
- the criteria and factors to be taken into account by competent authorities and ESMA in determining when adverse events or developments arise that might be a serious threat to financial stability, market confidence, orderly functioning and integrity of markets in the EU.
The deadline for responses to the consultation is 9 March 2012. ESMA will then consider the feedback it receives to the consultation and at an open hearing held on 29 February in March 2012. It expects to publish a final report and to submit its draft advice on delegated acts to the Commission by mid-April 2012.