With regard to short selling, or more precisely, net short positions, two sets of measures have been taken: lowering of thresholds (a) and prohibitions (b). These measures are based on the provisions of Articles 20 and 28 of the Regulation of 14 March 2012 (Regulation (EU) No 236/2012 of the European Parliament and of the Council of 14 March 2012 on short selling and certain aspects of credit default swaps) which relate to the powers of intervention of national authorities (Article 20) and ESMA (Article 28) in the event of exceptional circumstances.
- The Regulation of March 14, 2012 requires that the national authorities be notified of all net positions relating to shares listed on a regulated market or a multilateral trading system when these positions exceed 0.2%: the threshold has been lowered to 0.1% by Article 2, § 2, of the decision of March 16, 2020 (ESMA decision of March 16, 2020 to require natural or legal persons holding net short positions to temporarily lower the notification thresholds for net short positions in relation to the issued share capital of companies whose shares are admitted to trading on a regulated market above a certain threshold for notification to the competent authorities, in accordance with Article 28 (1) (a) of Regulation (EU) No 236/2012 of the European Parliament and Council), which entered into force immediately, and applied for a period of 3 months, and therefore until June 16, 2020 (art. 4).
- Short sales, known as "naked" sales, are in principle permitted, although they must in fact be covered meaning that they are indirectly prohibited. Subject to this reservation, they are possible under normal circumstances, but may be prohibited in exceptional circumstances. These prohibitions were issued in March 2020 by the French, Italian, Spanish, Belgian and Austrian authorities (AMF, Temporary ban on short selling of shares admitted to trading on trading platforms under the jurisdiction of the AMF , in accordance with Article 23 of Regulation (EU) of the European Parliament and of the Council No 236/2012 of March 14, 2012 (March 17, 2020); Decision (of the President) of March 17, 2020 relating to the prohibition of net short positions; Decision (of the college) of March 17, 2020 relating to the extension of the prohibition on net short positions; Opinion of the ESMA of 17 March 2020 on a proposed emergency measure by Comision Nacional del Mercado de Valores the under Section 1 of Chapter V of Regulation (EU) n ° 236/201, 23 March 2020, ESMA70-155-9556; ESMA Opinion of March 17, cc2020 on a proposed emergency measure by the Commissione Nazionale per le Società e la Borsa under Section 1 of Chapter V of Regulation (EU) No. 236/201, March 23, 2020, ESMA70-155-9565; ESMA Opinion of March 19, 2020 on a proposed emergency measure by the Financial Security and Markets Authority under Section 1 of Chapter V of Regulation (EU) No. 236/201, March 23, 2020, ESMA70-155-9590; ESMA Opinion of March 23, 2020 on a proposed emergency measure by the Austrian Finanzmarktaufsicht under Section 1 of Chapter V of Regulation (EU) No. 236/201, March 23, 2020, ESMA70-155-9604).
Financial information, as it results from the Transparency Directive (Directive 2004/109/EC of the European Parliament and of the Council of December 15, 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Dir. 2001/34/EC), is an important element for investors because they take it into account in their investment decision, which ESMA recalls in its public statement of March 27, 2020 (Public Statement, Actions to mitigate the impact of COVD-19 on the EU financial markets regarding publication deadlines under the Transparency Directive, March 27, 2020, ESMA31-67-742). At the same time, and because of deadlines imposed by legislation but occurring during the health crisis that the European Union is experiencing, ESMA recognises that it may be difficult for issuers to meet the dates imposed by the texts. ESMA therefore encouraged national authorities to take account of issuers' difficulties if they have any in meeting their obligations, it being specified that issuers must inform the national authorities, explain the reasons for their delay and indicate the estimated date of publication.
Distribution of dividends
In a press release of March 30, 2020 entitled "The ACPR calls on credit institutions under its direct supervision and finance companies to refrain from distributing a dividend", the ACPR invited "credit institutions under its direct supervision and finance companies, to ensure, at least until October 1, 2020:
- that no dividend will be paid and that no irrevocable commitment to pay dividends will be made for the years 2019 and 2020
- to ensure that no share buybacks to remunerate shareholders take place".
The aim is that "in the context of the COVID 19 pandemic, credit institutions under the direct supervision of the French Prudential Supervisory Authority (ACPR) and finance companies must continue to fulfil their role of financing households and businesses". The press release of March 30, 2020 does not mention any text in support of this recommendation. (See also Recommendation BCE / 2020/1 of March 27, 2020 on dividend distribution policies during the COVID-19 pandemic and repealing recommendation BCE / 2020/1).
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Originally published 27 April, 2020
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