On 2 March 2010, the Committee of European Securities Regulators published a report to the European Institutions that recommended the introduction of a pan-European disclosure regime for net short positions in shares.
The recommendation is based on a two tier model for disclosure of significant individual net short positions in all shares that are admitted to trading on an EEA regulated market and/or an EEA MTF. The regime would not apply to shares admitted to trading on an EEA regulated market or an EEA MTF if their primary market is located outside the EEA. At the lower threshold of 0.2%, positions would be disclosed to the relevant regulator, at the higher threshold of 0.5% positions would be disclosed to the regulator and to the market as a whole. All changes of position would be reported at increments of 0.1% first to the regulator (from 0.3% until 0.4%) and then to the regulator and the market.
When calculating whether a disclosure was required, market participants would need to take account of any transaction which provided an economic exposure to a particular share. Therefore transactions in exchange traded and OTC derivatives would be covered as well as short positions in the cash markets. Disclosure reports of short positions - whether to the regulator or the market - would be made on the trading day following that on which the relevant trigger threshold has been crossed. There would be exemptions from the disclosure requirements for short positions resulting from market making activities.
In parallel, CESR members that already have powers to introduce a permanent disclosure regime, will begin the process of implementing the regime, the others will aim at implementing such a regime on a best efforts basis.
View Model for a Pan European Short Selling Disclosure Regime, 2 March 2010