The American and British authorities have just introduced exceptional provisions on short-selling of the securities of the companies falling within their remit. These provisions amend the regulations in force in response to the situations in their respective financial sectors and markets.
As indicated in its previous statement, the Autorité des marchés financiers affirms that, in accordance with existing French regulations, an investor must be able to deliver securities sold three days after the trade date. It is up to the financial intermediary to ensure compliance with the relevant requirements.
The AMF Board meeting on 19 September 2008, acting in conjunction with the AMF’s counterparts from the Euronext College of Regulators, adopted the following provisions to maintain a regulatory framework that is consistent from one financial centre to the next, especially in Europe, and to prevent regulatory shopping.- The following measures apply to equity securities issued by credit institutions and insurance companies traded on French regulated markets (Euronext Paris, MATIF and MONEP). They apply to transactions made on one's own account or on behalf of third parties, including spot, forward and option transactions. They do not apply to transactions made by investment service providers acting as market makers, liquidity providers or as counterparties for block trades in equities.
- In application of Article 516-5, paragraph 2 of the AMF General Regulation, any investor giving a sell order for one of the securities concerned with instructions for deferred settlement and delivery must hold 100% of the securities to be sold on its account with its financial intermediary.
- In reference to Article 570-1 of the General Regulation, any investment service provider receiving a sell order for one of the securities concerned must require its client to deposit the securities to be sold on its account with the investment service provider before the order is executed. If the investment service provider is not the custodian of its client’s assets, it must obtain assurance from its client that the client holds the relevant securities1.
- Any person holding a net short position that represents an economic interest of one quarter of one percent or more of the capital of one of the companies concerned must disclose it to the AMF (Market Surveillance Unit) and the market by any appropriate means on the following day, at the latest.
- Any person, acting on their own account or on behalf of a third party, who executes a transaction with the purpose or effect of violating or circumventing these provisions shall be deemed likely to have committed market abuse.
- Financial institutions are requested to refrain from lending any of the securities concerned in order to reduce the causes of market disruption. This does not apply to securities lending to cover existing positions, to meet commitments made before these measures were implemented or, more generally, to transactions that are not related to creating short positions.
- The Autorité des marchés financiers shall undertake all necessary investigations to ensure compliance with these provisions.
- These provisions shall come into force on Monday 22 September 2008 for a period of at least three months, during which time the AMF reserves the right to make any adjustments warranted by market developments. At the end of the period, the AMF shall decide which measures, particularly those relating to the transparency of short-selling transactions, shall remain in force.
