Regulation (EU) No 236/2012 of the European Parliament and of the Council on short selling and certain aspects of credit default swaps (the "EU Short Selling Regulation")—as well as a Commission Implementing Regulation and three Commission Delegated Regulations—came into force on 1 November 2012. These instruments are directly applicable in Member States and do not require any implementation into national law.
The EU Short Selling Regulation applies, broadly speaking, in respect of shares admitted to trading on EU trading venues, sovereign debt issued by EU sovereign issuers and related credit default swaps. It does not matter where a person entering into a short sale in these instruments is located. Therefore, firms in third countries could be affected by the EU Short Selling Regulation.
The EU Short Selling Regulation sets out:
1) transparency requirements in relation to short positions in shares or sovereign debt;
2) restrictions on uncovered short sales in shares or sovereign debt or uncovered short positions in sovereign credit default swaps;
3) buy-in procedures; and
4) additional measures that may be taken in exceptional circumstances, and provides for only limited exemptions.
The new requirements introduced by the EU Short Selling Regulation represent a step change from the previous UK disclosure regime applicable to short positions during rights issues and to short positions in UK financial sector companies.
This client alert provides an overview of the EU Short Selling Regulation.
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© 2012 White & Case LLP