The European Securities and Markets Authority (ESMA) has issued a temporary requirement on net short positions in traded shares as it seek additional measures to secure financial market in COVID-19 pandemic.
It has made the requirement for any holder of short positions in shares traded on a EU regulated market to notify their national competent authority (NCA) if the position reaches or exceeds 0.1% of the issued share capital after the entry into force of the decision.
ESMA believes that lowering the reporting threshold is a precautionary action which is essential for authorities to monitor developments in the market during the turbulent times caused by the coronavirus. It also believes the measure can support more stringent action if needed to ensure the orderly functioning of EU markets, financial stability and investor protection.
The regulator thinks the current circumstances constitute as a serious threat to market confidence in the EU and the proposed measure is appropriate and proportionate to address the current threat level to EU financial markets.
Its new measure will apply immediately and will require net short position holders to notify NCAs of their relevant positions at close of the trading session on March 16 2020.
These requirements apply to any natural or legal person regardless of what country they reside in. The do not apply to shares admitted to trading on a regulated market where principal venture for the trading of shares is in a third country, it said.
ESMA and NCAs are continuing to monitor developments in financial markets and the impact COVID-19 is having on them.
This is the latest action to be taken by the European regulators as they try to curb the impact of coronavirus on the financial market. Last week, ESMA released new advice for financial market participants to prepare themselves for serious problems caused by the pandemic.
The regulator also announced its staff will be working remotely to help reduce the spread of the virus.
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