Following the publication of the Commission Delegated Regulation (EU) 2022/27 (“SSR”) by the European Commission in the Official Journal, the initial net short position reporting threshold will be permanently lowered from 0.2% to 0.1%. This lower disclosure threshold is effective as of the 31 January 2022.
In accordance with Article 5(1) of the SSR:
‘a natural or legal person who has a net short position in relation to the issued share capital of a company that has shares admitted to trading on a trading venue shall notify the relevant competent authority, in accordance with Article 9, where the position reaches or falls below a relevant notification threshold referred to in’ Article 5(2) of the SSR.’
As of the 31 January 2022, Article 5(2) of the SSR will read as follows:
‘A relevant notification threshold is a percentage that equals 0,1 % of the issued share capital of the company concerned and each 0,1 % above that.’
Any net short positions that reach or exceed the new 0.1 % threshold on 31 January 2022 will need to be notified to the The Malta Financial Services Authority (the “Authority”) before 3.30 pm local time on 1 February 2022.
The Authority is taking the stance that following the coming into force of the SSR, existing net short positions (i.e. positions entered into before 31 January 2022) ranging between 0.1% – 0.19% do not need to be notified to the Authority. However, should existing positions reach or exceed 0.2% or fall below 0.1% on or after 31 January 2022, a notification would be required.
Notwithstanding the above please note that, in terms of ESMA’s temporary preliminary action to require net short position holders to report positions of 0.1% and above; net short positions that reached, exceeded or fell below 0.1% between 16 March 2020 and 19 March 2021 were notifiable in terms of Article 5(1) of the SSR. Such notifications had to be made by not later 3:30 pm on the following trading day.
Managers should look into reviewing and updating their operational and compliance systems to incorporate the lower notifiable thresholds as required.