The new EU short selling regime came into force on 1 November 2012. The regime, which is established by the EU Short Selling Regulation (No 236/2012), contains disclosure requirements and restrictions on short selling. The Regulation:
- requires net short positions in shares traded on the Main Market of the London Stock Exchange to be notified to the FSA at a 0.2% threshold and publicly disclosed above a 0.5% threshold; and
- bans uncovered short sales of such shares.
The Regulation also contains provisions relating to the short selling of sovereign debt and sovereign credit default swaps.
Previously in the UK, the short selling disclosure rules (contained in FINMAR 2) only applied to shares in selected UK financial institutions and issuers undertaking a rights issue. The new EU regime applies to net short positions in relation to shares admitted to trading on a regulated market in the EEA (so including the Main Market of the London Stock Exchange but not AIM).
The new short selling disclosure regime sits alongside the existing UK disclosure regimes contained in Disclosure and Transparency Rule 5, and in a takeover offer situation, Rule 8 of the Takeover Code.
Our briefing summarises the basics of the new EU regime, focusing on its application to shares. To access additional briefings on the Regulation and Delegated Acts, click here.
The FSA has also published a webpage on short selling, with forms for notifying and disclosing net short positions under the new Short Selling regime. The forms contained on the webpage are:
- Public disclosure of shares;
- Cancellation of public disclosure of shares;
- Private notification of shares;
- Private notification of sovereign debt;
- Private notification of uncovered position in sovereign CDS;
- Cancellation notification of shares;
- Cancellation notification of sovereign debt; and
- Cancellation notification of uncovered position in sovereign CDS.