EUROPEAN UNION: ESMA Publish Table outlining Compliance with the Short Selling Regulation

Wednesday February 22 2017

The European Securities and Markets Authority (ESMA) has published an updated compliance table indicating the competent authorities who comply or intend to comply with ESMA’s guidelines on exemption for market making activities and primary market operations under Regulation (EU) 236/2012 on short selling and certain aspects of Credit Default Swaps (ESMA/2013/74).

All EU Member States and Norway comply with or intend to comply with all of the guidelines, with the exception of the UK, Germany, France, Denmark and Sweden.

UK
The FCA will comply with all the Guidelines with the exception of the provisions concerning the requirement to be a member of a trading venue and the scope of the products eligible for the exemption i.e. paragraphs: 19-22; 30; 32; 35-36; 43 (first indent only and last indent, to the extent that it relates to those parts of the guidelines the UK is not complying with); 65 (xi); and 75.

The FCA considers that the Guidelines go beyond what is required in the Regulation by making it a condition for the exemption that the market maker must be a member of a trading venue where the financial instrument in question is admitted to trading or traded and in which it conducts a market making activity on that instrument.

Denmark

The areas where Danish FSA intends not to comply with the guidelines are the following:

• Para 35 – 36: Market membership, and
• Para 75 – 76: Transitory Measures.

Germany

The areas where BaFIN intends not to comply with the guidelines are the following:

• The trading venue membership requirement (paragraphs 19-22; 35-36; 43 first bullet and last bullet); and
• Product scope regarding the exemption on a per instrument basis – regarding instruments different from a share or a sovereign debt instrument, that creates long or short positions as defined in Articles 3 and 4 of the Regulation (paragraphs 30; 32).

France

The AMF intends to comply with the full provisions of the guidelines though the said guidelines shall only enter into force as soon as they are fully applied by all NCAs throughout the EU, in order to avoid competition distortion.

Sweden

The area where Finansinspektionen intends not to comply with the guidelines is:

• The membership per financial instrument criteria in paragraph 20-22, 35-36 and 43 (the first indent) of the guidelines, and the reassessment requirement in paragraph 75 of the guidelines.

Please click the link at the top of the page for further information on the justifications provided by jurisdictions for non-compliance.