Capital Markets: ESMA recommends action by issuers and financial markets participants and lowers the short-position reporting threshold in response to the Covid-19 pandemic
On 11 March 2020, the European Securities and Markets Authority (ESMA) issued recommendations to financial market participants due to the impact of COVID-19. ESMA’s recommendations relate to business continuity planning, market disclosure under MAR (including the potential impact of COVID-19 on issuer fundamentals and prospects), financial reporting and fund management. National competent authorities (NCAs) are also monitoring these topics closely.
New reporting obligation
On 16 March 2020, ESMA issued a decision requiring any holder of a net short position to notify the relevant national competent authority if the position reaches or exceeds 0.1% of the issued share capital of a company whose shares are traded on an EU regulated market. Prior to this decision the threshold was 0.2%.
ESMA lowered the reporting threshold as a precaution, in response to the exceptional circumstances associated with the ongoing COVID-19 pandemic. The measure is intended to support more stringent action, if required to ensure the orderly functioning of EU markets, financial stability and investor protection. The new reporting threshold was made immediately applicable, meaning the holders of net short positions were required to notify the relevant NCA if they met the threshold at the close of trading on Monday, 16 March 2020. The reporting obligation applies to any natural or legal person, regardless of the country of residence, holding a net short position in shares traded on an EU regulated market. In the Netherlands, the national competent authority is Netherlands Financial Markets Authority.
If you have questions about any new ESMA recommendations or measures or the filing of notifications with the Netherlands Financial Markets Authority, please do not hesitate to contact us.
Would you like to stay up to date of our publications regarding COVID-19? Register here. We will send you a weekly update with the latest publications.