AFM lifts short-selling ban and changes notification requirement

In October 2008 the AFM (Autoriteit Financiële Markten) banned the short selling of shares in listed Dutch financial institutions. In addition, the AFM required the notification, on an ongoing basis, of net short positions of 0.25% or more of the total issued capital of those financial institutions. Click here for our newsflash of 6 October 2008 to read more on these measures.

End of ban on short selling

The ban on short selling and the notification requirement initially applied for a period of 30 days, but these measures were prolonged several times, most recently until 1 June 2009. The AFM has now announced that it will allow the ban to expire on that date. According to the AFM, short selling is important to the proper functioning of the financial markets and the prohibition should therefore not last longer than necessary. The AFM has also taken into consideration that the UK Financial Services Authority, the supervisory authority for the main European capital market, has already abolished its ban on short selling and that it is likely that more European countries will soon end their measures against short selling.

Changed notification requirement

In addition, the AFM has amended the notification requirement. To limit the administrative burden imposed by this requirement, under the revised rules notification will only be required if a net short position in a listed Dutch financial institution reaches, exceeds or falls below the threshold of 0.25%, 0.35%, or 0.45% of the issued share capital of the relevant company or any 0.10% threshold thereafter. The AFM has retained the notification requirement in order to be able to keep an eye on short positions and on possible relationships between short positions and manipulative strategies. Only the AFM must be notified; as is the case under the existing measures, public disclosure is not required. It is envisaged by the AFM that the notification requirement will remain in effect until 1 January 2010.

Dutch financials

The new notification requirement will apply to short positions in the same – eight – Dutch financial institutions (all listed on NYSE Euronext Amsterdam) covered by the earlier measures:

Aegon N.V.  

ING Groep N.V.  

Fortis N.V.  

BinckBank N.V.  

Kas Bank N.V.  

SNS Reaal N.V.  

Van der Moolen Holding N.V.  

Van Lanschot N.V.