ARTICLE
26 January 2022

Lowering Of Short Positions Holding Disclosure Threshold Officially Announced

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Elias Neocleous & Co LLC

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Elias Neocleous & Co LLC is the largest law firm in Cyprus and a leading firm in the South-East Mediterranean region, with a network of offices across Cyprus (Limassol, Nicosia, Paphos), Belgium (Brussels), Czech Republic (Prague), Romania (Budapest) and Ukraine (Kiev). A dynamic team of lawyers and legal experts deliver strategic legal solutions to clients operating in key industries across Europe, Asia, the Middle East, India, USA, South America, and China. The firm is renowned for its expertise and jurisdictional knowledge across a broad spectrum of practice areas, spanning all major transactional and market disciplines, while also managing the largest and most challenging cross-border assignments. It is a premier practice of choice for leading Cypriot banks and financial institutions, preeminent foreign commercial and development banks, multinational corporations, global technology firms, international law firms, private equity funds, credit agencies, and asset managers.
Regulation (EU) No 236/2012 establishes the obligation to notify competent authorities of significant net short positions in relation to the issued share capital of a company that has shares...
European Union Finance and Banking
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Regulation (EU) No 236/2012 establishes the obligation to notify competent authorities of significant net short positions in relation to the issued share capital of a company that has shares admitted to trading on a European Union trading venue, where the position reaches or falls below the relevant notification threshold. The Commission monitors whether the relevant notification threshold remains appropriate considering the developments in financial markets and assesses whether it is necessary to modify that threshold in accordance with Article 5(4) of that Regulation.

In early 2020, unusual market pressures and volatility in terms of selling activity, due to the global outbreak of COVID-19, had a downward impact on prices, affecting the positions of issuers from all sectors across financial markets. The European Securities and Markets Authority (ESMA) then temporarily lowered the relevant notification threshold for significant net short positions in shares, as a measure to improve ESMA's and regulators' ability to assess the situation and be able to react quickly against this background.

In the context of (positively) assessing this measure, and in light of the improving market conditions, the Commission now considers that uncertainty with respect to the regulatory reporting obligation should be avoided and rules and obligations in this respect should be stable. On that basis, and taking also into account recommendations set out in an ESMA opinion ( available here), with which the Commission agrees, the latter has proceeded to the introduction of Regulation (EU) 2022/27 amending Regulation (EU) No 236/2012, and setting the relevant notification threshold permanently at 0,1 %. The date of effect of this is 31 January 2022.

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