Permanent Regime On Short-Selling: Autorité Des Marchés Financiers Publishes Working Group Report And Launches Public Consultation

The AMF announced on 6 November 2008 that it was forming a working group led by Marie-Ange Debon and Jean-Pierre Hellebuyck to make proposals to the Board concerning a short-selling regime to be adopted on a permanent basis following the exceptional measures introduced on 19 September 2008.

Based on the findings of the report , which is being published today, the Board is putting out to consultation a set of measures intended to regulate short-selling in normal market conditions. Responses should be emailed to contact@amf-france.org by 10 April 2009.

Broadly, the measures proposed by the Board consist in:

considering that it is neither realistic nor advisable to attempt to ban short selling systematically, but that the practice should be regulated; in particular, any person placing an order for a short sale must make the necessary arrangements to be able to deliver the securities within the standard settlement cycle (T+3);
imposing stricter penalties than currently on sellers unable to make timely delivery;
ensuring a transparent market by publishing net short positions exceeding a defined threshold such as 0.25% of the capital of a listed company; as a supplemental measure, investors could be required to inform their intermediary whether the order they are placing is for a short sale, thus allowing the regulator to disseminate aggregate information to the market;
requiring that short sellers declare to the regulator the volumes and prices of securities loans, so that the regulator is alerted in good time to possible pressures in the securities lending market.

As the working group has pointed out, some of the recommended measures will not be fully effective unless agreed upon by regulators in the main financial centres. The AMF will make every effort to secure such an agreement before deciding, once the consultation is complete, on the final regime.

Pending the Board's decision on the outcome of the consultation, which is being launched today, the exceptional measures introduced on 19 September with regard to financial stocks are maintained.