EUROPEAN UNION: ESMA issues opinion on extension of Greek short selling ban

Wednesday July 29 2015

The European Securities and Market Authority (ESMA) have issued their official opinion on the renewal of an emergency measure by the Greek Hellenic Capital Market Commission (HCMC) on short selling and certain aspects of credit default swaps.

ESMA’s official opinion is as follows:

On the adverse events or developments. ESMA considers that adverse developments which constitute a serious threat to market confidence in the Greek market still persist. Despite the partial reopening of credit institutions on 20 July 2015, the situation of fragility in the financial system and in the broader Greek economy continues. The relation between this situation and the financial markets is clear, as evidenced by the continued closure of Greek financial markets.

On the appropriateness and proportionality of the measure. ESMA considers that the measure is appropriate and proportionate to address the above mentioned threats that persist in the Hellenic Republic. Allowing short positions to be built at this stage could exacerbate the threats to financial stability, especially as regards the financial sector.

On the duration of the measure. ESMA considers that the duration of the measure is justified. It is a relatively short renewal period that indicates that the measure is linked with specific events and allows its reconsideration at short intervals, which ensures that the assessment of the risks is performed frequently. Besides, ESMA appreciates HCMC’s statement in its notification of intent that the measure may be lifted before the end of the established period or renewed in accordance with the relevant provisions of Regulation (EU) No 236/2012 if circumstances that justified the imposition of the measure improve, persist or worsen.

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