France, Spain, Belgium and Italy impose restrictions on the short selling of shares in financial companies

The European Securities and Markets Authority ("ESMA"), an independent authority established by the European Union (“EU”) with the role of safeguarding the stability of its financial system, announced yesterday that some authorities in the EU have decided to impose or extend existing short-selling bans or restrictions in their respective countries due to recent volatility in financial markets:

"The following countries have today announced or will shortly announce new bans on short-selling or on short positions: Belgium, France, Italy and Spain. Information on these measures can be retrieved from the websites of the relevant competent authorities. These measures will take effect as of 12 August 2011."

Generally, the new rules in France, Belgium and Spain (Italy is still pending) only relate to instruments issued by financial companies.  The French and Spanish bans are scheduled to last for 15 days but may be extended

Click here to read the ESMA statement in full.

France

Effective 12 August, 2011, France’s Autorité des Marchés Financiers (“AMF”) has banned the creation of any net short position or the increase of any net short position, including intraday, by any persons located anywhere in the “equity shares” or “securities giving access to the capital of” the following financial companies: April Group, Axa, BNP Paribas, CIC, CNP Assurances, Crédit Agricole, Euler Hermès, Natixis, Paris Ré, Scor, and Société Générale.

Click here to read the AMF announcement.

Spain

Effective 12 August, 2011, Spain’s Commission Nacional del Mercado de Valores (“CNMV”) has banned transactions that involve the creation or increase of short positions in certain financial stocks, subject to certain exceptions.

Click here for a Spanish language version of the CNMV’s press release which lists the relevant financial issuers.

Belgium

Effective 12 August, 2011, Belgium’s Financial Services and Markets Authority (“FSMA”) has extended the existing ban on uncovered transactions (in shares or derivatives) executed on Euronext Brussels to “covered shorting.” Accordingly, the extended measures prohibit the taking of a net economic short position by any means whatsoever, or the extension of such a position to the shares of the following financial companies: Ageas, Dexia, KBC Group and KBC Ancora. Existing net economic short positions are not impacted by the ban, but clearly such positions may not be increased. Existing disclosure obligations remain in force.

Click here to read the FSMA announcement.

Italy

ESMA’s press release refers to Italy.  However, at the time of writing, Italy’s Commissione Nazionale per le Società e le Borse (“CONSOB”) have not issued a press release relating to short selling. CONSOB is understood to be meeting today.

For details of CONSOB’s actions as they emerge, please refer to its website accessible here.

Greece

On 8 August 2011, the Hellenic (Greek) Capital Market Commission announced a temporary ban on the short selling of shares or units in exchange-traded funds listed on the Athens Exchange irrespective of the venue where the transaction is executed.  This Decision took effect from 9 August 2011 and is scheduled to remain in force up to and including 7 October 2011.

 UK

The UK’s Financial Services Authority have not announced any changes to its current short selling regime.  Click here for information relating to the short selling regime currently operative in the UK.  This dates from 2008 and relates to companies undergoing a rights issue and financial sector companies.

ESMA table on short selling

A mostly up to date (but often a day or more behind developments), consolidated table on measures taken by the EU’s various regulators relating to short selling is available here on the ESMA website at all times.

When will we have a harmonised short selling regime in the EU?

Click here for a brief summary of short selling measures in recent years and a progress update on moves within the EU for a harmonised regime for short selling.

If you have any questions regarding this subject, please contact Peter Moore, Stephen Burke or Alan Leale-Green. Alternatively telephone 020 7408 2448 to speak to your usual IMS contact.