EUROPE: ESMA publishes consultation on market maker and primary dealer exemption for EU short selling

Monday September 17 2012

The European Securities and Markets Authority (ESMA) has published a Consultation Paper on Exemption for market making activities and primary market operations under the EU Short Selling Regulation, which contains draft Guidelines on market making and the application of exemptions for market making activities and primary market operations under the Regulation.

The Guidelines are intended to support the creation of a level-playing field, consistency of market practices and convergence of supervisory practices amongst national securities market regulators across the EEA.

The draft Guidelines set out and clarify:

• the scope of the exemption for market making activities including the required link between the relevant financial instrument, the trading venue or “equivalent” third country venue and the membership of the notifying entity;
• how the relevant competent authority for notification is defined, in particular for notifying entities from third countries;
• guidelines for the process of notification of the intent to use the exemption and its content, including common templates for notification as well as the approach to processing notifications received by relevant competent authorities and assessing conditions of the exemption; and
• transitional measures relating to the sending of notification of intention to use the exemption for market making activities or as Authorised Primary Dealers as of 1 September 2012.

The closing date for responses is 5 October 2012 and an open hearing on the issue will be held in Paris on 1 October 2012.