ESMA publishes review on impact of short selling regulation

03 June 2013

ESMA published its technical advice on the evaluation of the Regulation of the European Parliament and of the Council on short selling and certain aspects of credit default swaps.

ESMA was asked to report on the observable effects of the Regulation and carried out an analysis on:

• the market impact of the transparency requirements, restrictions on uncovered short selling and uncovered sovereign CDS and of any temporary measures restricting short selling; and
• whether the current provisions of the Regulation and their application are fulfilling the needs of market participants in terms of transparency and the needs of the regulators to perform their supervisory functions.

Steven Maijoor, ESMA Chair, said: “ESMA’s review has found that the introduction of the Short Selling Regulation has had some positive effects in terms of enhancing market transparency and reducing risks of settlement fails in EU financial markets. Due to the short period of operation of the Regulation, ESMA was subject to severe limitations in terms of available data and practical experience in supervision under the Regulation. However, ESMA is advising the European Commission to consider adjusting  a number of aspects in the Regulation that do not alter its main elements.”

Final report

Full press release

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