CESR Proposes Pan-European Short Selling Disclosure Regime
The Committee of European Securities Regulators (CESR) published recommendations for the introduction of a pan-European disclosure regime for net short positions in shares. Under the proposed regime, at the lower threshold of 0.2%, positions should be disclosed to the relevant competent authority. In addition, steps of 0.1% would trigger further disclosure obligations. After the position reaches the higher threshold of 0.5% and any additional steps of 0.1% thereafter, the position should be disclosed to the competent authority as well as to the market as a whole. AFME, which had responded to CESR's earlier consultation, commented: "While we welcome the move towards harmonization across member states, we are disappointed that the threshold for market disclosure is so low. The 1% enhanced disclosure requirement during bids seems to be working effectively and it is not clear that any benefits of the additional half a percent will outweigh the negative impact on liquidity and market efficiency."
CESR recommendations
BaFin Introduces Transparency System for Net Short-Selling Positions
The Federal Financial Supervisory Authority (BaFin) issued a General Decree under which market participants must notify BaFin of net short-selling positions in selected financial stocks of a threshold of 0.2 % or more and publish the same of a threshold of 0.5 % or more. The provision provides for a two-tier transparency system: first, net short-selling positions of 0.2 % or more of the shares in issue of the specified companies must be notified to BaFin. Further notifications are required when such positions reach, exceed or fall below a further 0.1 % in each case. In addition, a publication of the position in anonymous form on the homepage of BaFin takes place at 0.5 % or more. The decree provides a list of institutions that must adhere to the new rules. The provision enters into force on March 25, 2010 and initially will apply until January 31, 2011.
BaFIN decree
ASIC Announces Changes to Short Selling Rules
The Australian Securities and Investments Commission (ASIC) announced changes to the Corporations Amendment Regulations that will alter rules on short selling. The changes delay the commencement of short seller obligations to lodge short position reports from April 1, 2010 to June 1, 2010 and reschedule the commencement of ASIC obligations to publish aggregated short position reports from April 1, 2010 to June 21, 2010. The change in the commencement of the short seller’s obligation to report its short positions will allow short sellers more time to ensure they have the appropriate systems in place to meet reporting obligations. ASIC will facilitate an industry-wide pilot test to allow short sellers access to the new reporting infrastructure from May 10, 2010.
ASIC rules
Barnier Speech on Restoring Confidence to Financial Markets
Michel Barnier, Commissioner of EU Internal Market and Services, spoke in London and outlined plans for financial regulation to “restore confidence to the financial markets.” Barnier said his first priority is to “to improve supervision all round in Europe” by creating a single rule book, coupled with strong supervisory coordination and real information sharing, trust between home and host countries, effective dispute settlement amongs supervisors and fit-for-purpose emergency and crisis management. Barnier also said “finding the right calibration and sequencing will be essential” and he plans to address capital requirements “in the autumn.” He also called for better corporate governance and closing regulatory loopholes as agreed to at the G20 level.
Barnier speech
EC Releases New EU2020 Plan
The European Commission (EC) released a new ten year plan which proposes five “measurable” EU targets for 2020 that will steer the process and be translated into national targets: for employment; for research and innovation; for climate change and energy; for education; and for combating poverty. The new plan, which still needs the endorsement of EU member states at a special economic summit to be held at the end of March, is constructed around restoring economic growth and promoting jobs. The report details broad reforms to the financial services sector, including strengthening prudential, accounting and consumer protection rules in the form a single European rule-book and strengthening the governance of financial institutions to address the weaknesses identified during the financial crisis in the area of risk identification and management.
EU2020 plan
European Parliament Releases Overview of Work in Financial Sector
The European Parliament published a document summarizing its activities aimed at tackling the financial crisis and stabilizing the economy. The document outlines Parliament's stance on the EU2020 strategy and contains information about work being done at the Parliamentary level to analyze the sources of the crisis and make proposals for the future. It also provides a brief overview of the progress and an expected timeline for the development of a new financial services architecture, and the passage of the Alternative Investment Fund Managers Directive and Capital Requirements Directive 3.
EP release
CESR Amends Protocol on Operation of MiFID Database
CESR published an amended version of its Protocol on the Operation of CESR Markets in Financial Instruments Directive (MiFID) Database. The protocol concerns the practical cooperation arrangements between CESR Members and the CESR Secretariat in order to manage the calculation and publication of MiFID market transparency calculations.
CESR amendment
Japanese FSA Announces Revision on the Designation of IFRS
The Financial Services Agency (FSA) updated the list of designated International Financial Reporting Standards (IFRSs), allowing all IFRSs and International Financial Reporting Interpretations Committee (IFRIC) interpretations approved and issued by the International Accounting Standards Board (IASB) on or before December 31, 2009, to be used in the voluntary application of IFRS in Japan by certain Japanese listed companies starting from the consolidated fiscal years ending on or after March 31, 2010. Japanese companies will be given the option to prepare their consolidated financial statements, starting from the consolidated fiscal years ending on or after March 31, 2010.
FSA announcement
AFME/ISDA Respond to ECB Consultation on ABS
The Association for Financial Markets in Europe (AFME) and the International Swaps and Dealers Association (ISDA) submitted a response to the European Central Bank’s consultation on the Provision of ABS Loan-Level Information in the Eurosystem Collateral Framework. The response welcomes the proposal from the ECB to introduce greater transparency in the Eurosystem Collateral Framework as enhancing loan level transparency is a necessary step to restart the securitization market. The response also includes comments on the proposed fields and definitions of the RMBS loan-level reporting template located in the Annex.
AFME response
