We have reported previously on the UK Financial Services Authority (FSA)’s short selling disclosure rules, most recently as consultation on its implementation of the UK’s Financial Services Act 2010 (click here to read our post). In that consultation, the FSA noted that the Committee of European Securities Regulators (CESR) was consulting on a Pan-European regime.

On 26 May 2010, CESR published its report. The report recommends private disclosure to the relevant regulator when thresholds of 0.2%, 0.3% and 0.4% of issued share capital are crossed, and public disclosure when 0.5% and each 0.1% thereafter are crossed. The report recommends that the permanent disclosure regime should not be limited by sector (in the UK, it is limited to the financial sector only).

The report also provides technical details including how to calculate net short positions and changes in those positions, netting and aggregation of net short positions where more than one investment decision maker takes net short positions within a single legal entity and exemptions from disclosure obligations for market makers.

CESR has recommended that the pan-European short selling disclosure regime is introduced as soon as possible. In the meantime, CESR has said that those of its members that already have the requisite powers to introduce the regime will start the process of doing so, while those members that do not have the necessary powers will seek to implement the regime on a best efforts basis, pending adoption of a European regime.

A copy of the report can be found by clicking here.