A consultation paper published by the European Securities and Markets Authority (ESMA) appeals for input on new regulation covering market maker and primary dealer exemptions for short selling.
The draft guidelines published on Monday clarify the scope of exemptions for market making activities and call for submissions to be made before 5 October.
The new regulations will force those involved in short selling to publicly list net short positions of more than 0.5% of a company’s stock, and notify the authorities before short selling 0.2-0.5% of a company’s stock available on the market.
The draft guidelines list 13 questions on exemptions for market making activities and primary market marking operations under the regulation to be addressed by parties wanting to make submissions, and the consultation period will also involve an open hearing on the issue in Paris on 1 October.
ESMA chair Steven Maijoor said consultation was important in building support and understanding of the details of the regulation.
“These guidelines are aimed at providing market users and national regulatory authorities with clarity on the criteria to be met in applying for a market making exemption, and the conditions to be used in assessing those applications,” Maijoor said.
Participants looking to apply for market maker or primary dealer exemptions should use this document to prepare their future applications, Maijoor said.
“Further to what ESMA previously indicated, today’s draft guidelines should be used as the interim benchmark by both participants and regulators in the application and assessment process pending the final publication of the guidelines,” he said.
The regulation was first published in the Journal of the European Union on 24 March and will come into effect from 1 November this year.
Last week ESMA published a question and answer document on their website elucidating contentious points in the regulation, including which shares would be subject to the new regulation.
Stocks traded on an EU venue would be included if their principal trading venue was also EU-based, which exempting foreign companies traded on European venues which are most commonly traded on venues outside of Europe.