With regard to the possibility of flagging short positions, our members agree with CESR that it appears to be inherent imperfections in the data arising from the mechanics of aggregation. Questions about how much value such information adds to other data should also be carefully pondered. Significantly, flagging of short sales would not provide the Competent Authorities with information about short selling activity in OTC markets. This element would considerably add to the unreliability of the picture, given that, according to our latest figures, equity OTC trading is around 40% of European trading.
Concerning the possibility of requiring the reporting of significant short positions, proportionate measures that address the policy concerns should be well justified and applied in a non-discriminatory way to all venues and instruments concerned. In the EU, to avoid disruptions to the Single Market, the same principles must apply in all jurisdictions and regulators must act in close coordination. Private reporting to the Regulator would also represent a valuable tool to gain information on market tensions and would be useful for market manipulation analysis. However, it involves increased implementation costs. There are also concerns with ensuring the completeness and correctness of the reported information.
The FESE response contains other comments concerning CESR’s questions about the proposed two-tier disclosure model, the (public and private) disclosure requirements and how the calculations of the short positions should be done.
FESE Response on CESR Consultation on short selling.pdf
