If you read this post back in May, then you’ll know that a permanent lowering of the threshold for net short positions has been on the cards for a while. Now, once again the European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, is proposing significant changes to the EU Short Selling Regulation (SSR). This change may lead to a higher volume of disclosures within this space.
Let’s take a look at the history behind the proposal
During the COVID-19 pandemic and the following market turmoil, ESMA temporarily lowered the disclosure threshold from a net short holding of 0.2% to 0.1%. The change was effective immediately, and compliance teams around the world were scurrying to ensure accurate compliance overnight. FundApps was able to implement the changes within hours of the announcement, and our clients were able to immediately see these updates in the system’s user interface.
What’s happening now?
On September 24th, 2021, a consultation paper was published by ESMA to set out the suggested improvements and clarifications. In addition to the proposal to permanently lower the initial disclosure threshold to 0.1% as announced on 20th May 2021 - which has since been approved by the European Commission and is currently under a scrutiny period - the consultation paper also suggests improvements to the scope of exemptions applicable under the SSR, and the calculation methods for net short positions. ESMA will consider the responses it receives to this consultation paper by 19 November 2021 and expects to publish a final report by the end of Q1 2022.
Should these amendments move forward, automation and efficient workflows will become a much more pronounced requirement given the expected higher volume of disclosures. Here at FundApps, our automated Shareholding Disclosure service is naturally prepared for changes of this nature, and our in-house team of regulatory experts are fully capable of changing our rules within just a few hours to reflect them. Our clients can rest assured that they will remain compliant regardless of any sudden changes of this nature to the regulations.
Are you concerned about how well your Excel sheets or in-house solution can handle fast-changing regulation? See why this Chicago based Asset Manager chose to join the FundApps community, and rid themselves of the onerous task of having to monitor changes within the regulatory landscape manually.
Get in touch with us and request a demo if you are interested in learning more about how you can shift your opportunity cost, and spend less time on regulatory reporting with the help of FundApps and our automated Shareholder Disclosure service.