11 January 2018
Reporter: Jenna Lomax

ESMA reviews short selling rulebook

Bans on short selling should instead only stop further increasing of net short positions, according to the European Securities and Markets Authority (ESMA) in its latest short selling regulation (SSR) release.

As part of its final technical advice the EU Commission, ESMA outlined amendments to SSR on he exemption for market making activities, short selling bans and the transparency of net short positions.

In terms of market making activities, ESMA suggests the EU Commission changes the definition of market making activities to include the different types of on-venue market making activities, described in the second Markets In Financial Instruments Directive.

On the reporting of short positions, ESMA pushed for a centralised notification and publication system across Europe.

ESMA said by proposing these amendments, it hopes SSR will achieve greater coordination and consistency between member states and will improve overall “relevance, effectiveness, coherence, and efficiency” in short selling.

The authority emphasised the limited feedback it received to the consultation paper —only 20 public responses were submitted. ESMA said that the number of responses was significantly lower than in previous consultations.

ESMA received 43 responses to its 2013 technical advice consultation and 35 responses on a separate consultation on the ESMA’s final report on the exemption for market making activities and primary market operations, also released in 2013.

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