GREECE: HCMC provides clarification on scope of emergency Greece short selling measures in application to 31st January 2013

Friday November 2 2012

In response to a query on the extent and scope of the emergency Greece short selling measures the HCMC has imposed under Article 20 of the EU Short Selling Regulation, the regulator has provided as follows:

“by taking into consideration,

A. Regulation (EU) No 236/2012, Article 2b,

`short sale’ in relation to a share or debt instrument means any sale of the share or debt instrument which the seller does not own at the time of entering into the agreement to sell including such a sale where at the time of entering into the agreement to sell the seller has borrowed or agreed to borrow the share or debt instrument for delivery at settlement

and,

B. Commission Delegated Regulation (EU) No 918/2012, of 5 July 2012 supplementing Regulation (EU) No 236/2012, Article 6,

Net short positions in shares — short positions

1. A short sale of a share through the short sale of a basket of shares shall, in relation to that share, also be taken into account to the extent that that share is represented in the basket.

2. For the purposes of Article 3(1)(a) and 3(3) of Regulation (EU) No 236/2012 where a position in a financial instrument, including those listed in Annex I, Part 1, confers a financial advantage in the event of a decrease in the price or value of the share, this position shall be taken into account in calculating the short position.

ANNEX I

PART 1

Article 5 and 6

— Options,

— Covered warrants,

— Futures,

— Index-related instruments,

— Contracts for difference,

— Shares/units of exchange-traded funds,

— Swaps,

— Spread bets,

— Packaged retail or professional investment products,

— Complex derivatives,

— Certificates linked to shares,

— Global depositary receipts.

it is concluded that the calculation of short selling is taking into account only the shares of a specific issuer, whereas the calculation of net short positions on that stock is taking into account all the above financial instruments.

The Hellenic Capital Market Commission (HCMC) decided to extend the temporary measures prohibiting the Greece short selling on the shares admitted to trading in the Athens Stock Exchange for a further 3 months, but did not ban the increase of net short position.

It is obvious that in a Greece short selling ban regime an investor could open short positions in a particular stock through the other financial instruments even though he cannot short sale the stock in the spot market.

In that respect, it is justified the requirement for notification of the significant net short positions given that a Greece short selling ban on the stocks admitted to trading in the Athens Exchange is in place.