(CESR) has published a consultation paper outlining proposals for a pan-European short selling disclosure regime. In order to address the concerns expressed by market participants operating in the EU in relation to the burden of having to comply with various different national requirements, CESR proposes to achieve a permanent and harmonised approach across the EEA by introducing European legislation in this area.

The Consultation Paper proposes the following:

  • A two-tier system for the disclosure of significant net short positions held in shares admitted to trading on an EEA regulated market or multilateral trading facility (MTF).
  • The proposed regime will cover positions in exchange-traded and over-the-counter (OTC) derivatives and short positions in cash markets.
  • It will require a short seller reaching a specified initial threshold to make a private disclosure to the regulator of the most liquid market for the share in which the position was held.
  • CESR proposes to set the private disclosure threshold at 0.1% of the company's issued share capital. If the position reached a second-tier threshold, it is proposed to be set at 0.5% where the short seller would be required to publicly disclose it's position to the market as a whole. Any further private or public disclosures would then be required if the short positions subsequently crossed the incremental threshold of 0.1%.

 The consultation period runs until 30 September 2009