Regulation (EU) No 236/2012 of the European Parliament and of the CouncilShow full title

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 (Text with EEA relevance)

SECTION 1 U.K. Powers of competent authorities

Article 18U.K.Notification and disclosure in exceptional circumstances

1.F1... [F2The FCA] may require natural or legal persons who have net short positions in relation to a specific financial instrument or class of financial instruments to notify it or to disclose to the public details of the position where the position reaches or falls below a notification threshold fixed by the [F3FCA] and where:

(a)there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the [F4United Kingdom] F5...; and

(b)the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.

2.Paragraph 1 of this Article shall not apply to financial instruments in respect of which transparency is already required under Articles 5 to 8. A measure under paragraph 1 may apply in circumstances or be subject to exceptions specified by the [F6FCA]. Exceptions may in particular be specified to apply to market making activities and primary market activities.

Article 19U.K.Notification by lenders in exceptional circumstances

1.F7... [F8The FCA] may take the measure referred to in paragraph 2 of this Article where:

(a)there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the [F9United Kingdom] F10...; and

(b)the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.

2.[F11The FCA] may require natural or legal persons engaged in the lending of a specific financial instrument or class of financial instruments to notify any significant change in the fees requested for such lending.

Article 20U.K.Restrictions on short selling and similar transactions in exceptional circumstances

1.F12... [F13The FCA] may take one or more of the measures referred to in paragraph 2 of this Article where:

(a)there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the [F14United Kingdom] F15...; and

(b)the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.

2.[F16The FCA] may prohibit or impose conditions relating to natural or legal persons entering into:

(a)a short sale; or

(b)a transaction other than a short sale which creates, or relates to, a financial instrument and the effect or one of the effects of that transaction is to confer a financial advantage on the natural or legal person in the event of a decrease in the price or value of another financial instrument.

3.A measure taken under paragraph 2 may apply to transactions concerning all financial instruments, financial instruments of a specific class or a specific financial instrument. The measure may apply in circumstances or be subject to exceptions specified by the [F17FCA]. Exceptions may in particular be specified to apply to market making activities and primary market activities.

Article 21U.K.Restrictions on sovereign credit default swap transactions in exceptional circumstances

1.F18... [F19The FCA] may restrict the ability of natural or legal persons to enter into sovereign credit default swap transactions or may limit the value of sovereign credit default swap positions that those persons are permitted to enter into where:

(a)there are adverse events or developments which constitute a serious threat to financial stability or to market confidence in the [F20United Kingdom] F21...; and

(b)the measure is necessary to address the threat and will not have a detrimental effect on the efficiency of financial markets which is disproportionate to its benefits.

2.A measure taken under paragraph 1 may apply to sovereign credit default swap transactions of a specific class or to specific sovereign credit default swap transactions. The measure may apply in circumstances or be subject to exceptions specified by the [F22FCA]. Exceptions may in particular be specified to apply to market making activities and primary market activities.

F23Article 22U.K.Measures by other competent authorities

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Article 23U.K.Power to restrict short selling of financial instruments temporarily in the case of a significant fall in price

1.Where the price of a financial instrument on a trading venue has fallen significantly during a single trading day in relation to the closing price on that venue on the previous trading day, the [F24FCA] F25... shall consider whether it is appropriate to prohibit or restrict natural or legal persons from engaging in short selling of the financial instrument on that trading venue or otherwise limit transactions in that financial instrument on that trading venue in order to prevent a disorderly decline in the price of the financial instrument.

Where the [F24FCA] is satisfied under the first subparagraph that it is appropriate to do so, it shall in the case of a share or a debt instrument, prohibit or restrict natural and legal persons from entering into a short sale on that trading venue or in the case of another type of financial instrument, limit transactions in that financial instrument on that trading venue in order to prevent a disorderly decline in the price of the financial instrument.

2.The measure under paragraph 1 shall apply for a period not exceeding the end of the trading day following the trading day on which the fall in price occurs. If, at the end of the trading day following the trading day on which the fall in price occurs, there is, despite the measure being imposed, a further significant fall in value of at least half of the amount specified in paragraph 5 of the financial instrument from the closing price of the first trading day, the [F24FCA] may extend the measure for a further period not exceeding 2 trading days after the end of the second trading day.

3.The measure under paragraph 1 shall apply in circumstances or be subject to exceptions specified by the [F24FCA]. Exceptions may in particular be specified to apply to market making activities and primary market activities.

F264.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F275.The fall in value shall be—

(a)10% or more in the case of a share which is considered to have a liquid market under Article 1 of Commission Delegated Regulation (EU) No 2017/567 of 18 May 2016 supplementing Regulation (EU) No 600/2014 of the European Parliament and of the Council with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions; and

(b)the amount specified in Commission Delegated Regulation (EU) No 918/2012, or in regulations made by the Treasury under paragraph 7, in the case of any share which is not considered to have a liquid market, or for other classes of financial instruments.]

6.F28...

The [F29Treasury may by regulations modify] the thresholds referred to in paragraph 5 of this Article, taking into account the developments in financial markets.

7.The [F30Treasury may by regulations specify] what constitutes a significant fall in value for financial instruments other than liquid shares, taking into account the specificities of each class of financial instrument and the differences of volatility.

8.[F31For the purposes of this Article, the FCA may make] technical standards specifying the method of calculation of the 10 % fall for liquid shares and of the fall in value specified by the [F32Treasury] as referred to in paragraph 7.

F33...

F33...

Textual Amendments

Article 24U.K.Period of restrictions

A measure imposed under Article 18, 19, 20 or 21 shall be valid for an initial period not exceeding 3 months from the date of publication of the notice referred to in Article 25.

The measure may be renewed for further periods not exceeding 3 months if the grounds for taking the measure continue to apply. If the measure is not renewed by the end of such a 3-month period, it shall automatically expire.

Article 25U.K.Notice of restrictions

1.[F34The FCA] shall publish on its website notice of any decision to impose or renew any measure referred to in Articles 18 to 23.

2.The notice shall specify at least details of:

(a)the measures imposed including the instruments and classes of transactions to which they apply and their duration;

(b)the reasons why the [F35FCA] believes it is necessary to impose the measures including the evidence supporting those reasons.

3.A measure under Articles 18 to 23 shall take effect when the notice is published or at a time specified in the notice that is after its publication and shall only apply in relation to a transaction entered into after the measure takes effect.

F36Article 26U.K.Notification to ESMA and other competent authorities

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