31 August 2012

BaFin: EU Short Selling Regulation changes notification requirements for market makers

The Regulation on short selling and certain aspects of credit default swaps will be applicable from 1 November 2012. The national provisions regarding short selling, in particular national rules concerning notification of market making activities, will no longer be applicable after 31 October 2012.

Article 17 of the EU Short Selling Regulation provides for an exemption of market making activities and primary market operations from the net short position transparency requirements and the restrictions on uncovered short sales. The notification of intent to make use of the exemption must be made in writing to the competent authority at least 30 calendar days before the intended first use of the exemption. The notification of intent may be submitted in writing to BaFin prior to the entry into force of the Regulation on 1 November 2012 within 60 calendar days in advance, i.e. as of 2 September 2012 at the earliest.

There is no grandfathering clause for activities which have already been notified under national law. Use of exemptions under Article 17 of the EU Short Selling Regulation can only be made where a notification of intent pursuant to the provisions of the Regulation is submitted.

BaFin has published a Guidance Notice dealing with the form of the notification of intent for market making activities and primary market operations under Article 17 of the EU Short Selling Regulation. The Guidance Notice provides information on how to deal with notifications under applicable national law that will coincide in time with the notifications of intent to be submitted pursuant to the EU Short Selling Regulation.

Press release

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