Lowering of short positions holding disclosure threshold officially announced

Regulation (EU) No 236/2012 establishes the obligation to notify competent authorities of significant net short positions in relation to the issued share capital of a company that has shares admitted to trading on a European Union trading venue, where the position reaches or falls below the relevant notification threshold. The Commission monitors whether the relevant notification threshold remains appropriate considering the developments in financial markets and assesses whether it is necessary to modify that threshold in accordance with Article 5(4) of that Regulation.

In early 2020, unusual market pressures and volatility in terms of selling activity, due to the global outbreak of COVID-19, had a downward impact on prices, affecting the positions of issuers from all sectors across financial markets. The European Securities and Markets Authority (ESMA) then temporarily lowered the relevant notification threshold for significant net short positions in shares, as a measure to improve ESMA’s and regulators’ ability to assess the situation and be able to react quickly against this background.

In the context of (positively) assessing this measure, and in light of the improving market conditions, the Commission now considers that uncertainty with respect to the regulatory reporting obligation should be avoided and rules and obligations in this respect should be stable. On that basis, and taking also into account recommendations set out in an ESMA opinion (available here), with which the Commission agrees, the latter has proceeded to the introduction of Regulation (EU) 2022/27 amending Regulation (EU) No 236/2012, and setting the relevant notification threshold permanently at 0,1 %. The date of effect of this is 31 January 2022.

For more information, please speak with Ioannis Sidiropoulos or your usual contact at Elias Neocleous & Co LLC.