MEMORANDUM ON THE
RESOLUTION OF THE EXECUTIVE COMMITTEE OF THE SPANISH NATIONAL SECURITIES
MARKET COMMISSION OF 27 MAY 2010 ON DISCLOSURE OF SHORT SELLING
In accordance with its Activities
Schedule 2010, on 27 May 2010, the Executive Committee of the Spanish
National Securities Market Commission (Comisión Nacional del Mercado
de Valores, “CNMV”), approved a review of the measures taken
by the Committee in its resolution of 22 September 2008 (the “2008
Resolution”), concerning the short selling of shares and other
equity securities admitted to trading on the Spanish Stock Exchanges.
The 2008 Resolution is the subject matter of the newsletter that can be
found at the following link: here.
We refer to the resolution of the Executive Committee of the CNMV of 27
May 2010 as the “2010 Resolution.”
The 2010 Resolution implements the
disclosure and publication regime for short positions in Spain, as
proposed by the Committee of European Securities Regulators (“CESR”).
This was set out in its report to the European Commission on 2 March
2010, named “Model for a Pan-European Short Selling Disclosure Regime”,
where it advised the creation of a general mandatory regime to disclose
short positions under the common regulation, with the aim of enhancing
transparency in the markets.
The above-referred CESR report was
complemented by another report issued by CESR on 26 May 2010, named
“Technical Details of the Pan-European Short Selling Disclosure Regime”.
The aim of this report was (i) to clarify some technical aspects of the
new disclosure regime outlined in the report referred to in the
preceding paragraph and (ii) to inform European regulators on measures
needed for the implementation of the new disclosure regime in their
The main amendments to the 2008
Resolution introduced by the 2010 Resolution are as follows:
2. NEW REGIME TO DISCLOSE Short
The two main changes included in the
2010 Resolution are the subject matter of the disclosure, and the
thresholds required. The other provisions included in the 2008
Resolution remain in force.
As stated in our previous newsletter,
the 2008 Resolution imposed the obligation to disclose all short
positions on shares or cuotas participativas of certain financial
sector issuers, provided that it exceeded 0.25% of the share capital of
the relevant issuer. The 2008 Resolution defined “short position” as the
net result of all positions in different financial instruments,
including shares or cuotas participativas, and any derivatives
which underlying assets are shares or cuotas participativas, that
imply a positive (profit) effect for the holder against downward
movements in the price of the relevant securities).
By virtue of the 2010 Resolution the
object of disclosure is extended to those short positions on any
share or cuota participativa admitted to trading in Spanish
official regulated markets (regardless of whether or not that issuer is
part of the financial sector). However, this obligation may not be
extended to short positions on shares admitted to trade on the
Alternative Stock Market nor on the Latibex.
The 2010 Resolution sets out new
thresholds for disclosure following the two tier model included in
the CESR reports referred to in paragraph 1. In this regard:
(i) The obligation to disclose all
individual short positions to the CNMV which exceed 0.2% of the share
capital (or cuotas) admitted to trading, and to also disclose the
reduction below that threshold once the position is disclosed. Moreover,
new disclosures must be made when the short position previously
disclosed is increased or decreased by up to 0.1% of the share capital.
(ii) The CNMV will publish on its web
page, on an individual basis, all the notifications received of short
positions which exceed 0.5% of the issuer’s share capital admitted to
trading, and will include the identity of the holder.
(iii) The CNMV will publish an
aggregate of the short positions disclosed but not yet published for
each issuer (namely, short positions held between 0.2% and 0.5% of the
share capital), updated at least every two weeks.
The CNMV has stated that it intends to
publish a revised version of the Q&A document on the 2008 Resolution
that is currently available on its web page. The CNMV has also pointed
out that, in the interim, the interpretative criteria included in CESR
reports should be deemed applicable.
Finally, it should be stated that the
notification obligations provided by the 2008 Resolution, as amended by
the 2010 Resolution, are independent from the ones that may apply by
virtue of the significant shareholding regulations.
3. DATE THE PROVISIONS COME INTO FORCE
The 2010 Resolution states that the
amendments referred to in paragraph 2 will come into effect on 10 June
2010. Persons or entities holding short positions subject to the
disclosure requirement must comply with this obligation by submitting
the relevant communication not later than 11 June 2010.