EU to end tighter short selling reporting requirements this month

The EU watchdog will not renew the short selling reporting changes which are due to expire on 19 March, following an extension in December last year.

By Annabel Smith

Stricter short selling reporting requirements implemented in Europe at the height of the coronavirus crisis will not be renewed by the EU markets watchdog later this month.

The move means that hedge funds will no longer be required to provide more information to regulators on short positions that reach of exceed 0.1% of the issued share capital.

The European Securities and Markets Authority (ESMA) confirmed it will allow the tighter short selling reporting rules to expire on 19 March.

“The overall level of net short positions is decreasing across the EU, reducing the risk that selling pressures could initiate or exacerbate potential negative developments connected with the evolution of the pandemic,” said ESMA.

Changes to short selling reporting, which were initially put in place on 16 March last year, were renewed in June, September, and December last year following the pandemic’s first and second waves and intense market volatility.  

Prior to the bans being put in place during the pandemic, funds only had to report net short positions that reached or exceeded 0.2% and from 20 March 2021 this will come back into play in Europe. 

Regulators across Europe temporarily banned short selling activity in certain stocks altogether several times as the pandemic gripped markets globally. Authorities in Austria, Belgium, Spain, Italy, France, Greece and the UK all imposed bans on creating or increasing short positions on some securities amid fears it could further harm markets.