ESMA has published its review on the compliance of five national competent authorities (NCAs) with the market maker exemption under the Short-Selling Regulation (SSR) under which market makers are not subject to the restrictions on uncovered short sales nor to the reporting and public disclosure obligations on significant net short positions in shares or sovereign debt. The review found that:

  • all NCAs have dedicated resources, processes and are staffed to handle the notifications;
  • there is a significant diversity in scrutiny of notifications and firms;
  • NCAs are not properly seeking advance assurance that market makers have appropriate organisational requirements to use exemptions;
  • some NCAs are applying a “per firm” approach to processing notifications for exemptions rather than a review of the notifications instrument by instrument as required by ESMA guidelines; and
  • some NCAs place an overreliance on monitoring by trading venues of market makers’ compliance with the rules and procedures of those trading venues.

(Source: ESMA Reviews SSR Compliance)