The European Securities & Markets Authority confirmed that they’d be implementing new measures that temporarily will ensure thresholds for Net Short Positions. This decision was made following the continued outbreak of Covid-19 throughout the European Union. Individuals holding Net Positions in Europe will be required to provide relevant data to the National Competent Authority. This requirement applies to positions exceeding the shared capital of 0.1%. Refusal to abide by these temporary conditions could prompt significant fines onto traders and investors. Markets must be evaluated daily by the European Securities & Markets Authority, with Net Position Limitations ensuring that additional fluctuations don’t occur.
Representatives with the European Securities & Markets Authority publicly addressed reporters on this decision. It was mentioned: “ESMA considers that lowering the reporting threshold is a precautionary action that, under the exceptional circumstances linked to the ongoing COVID-19 pandemic, is essential for authorities to monitor developments in markets. The measure can support more stringent action is required to ensure the orderly functioning of EU markets, financial stability and investor protection. ESMA considers that the current circumstances constitute a serious threat to market confidence in the EU and that the proposed measure is appropriate and proportionate to address the current threat level to EU financial markets.”
This threshold on Net Positions has been implemented effective immediately, with investing holders required to begin meeting this criterion on March 16th to the NCA. Requirements will be demanded after daily trading sessions, with the public announcement notifying that these provisional measures don’t apply to Traded Shares through regulated markets. Neither the European Securities & Markets Authority or National Competent Authority provided details to when standard thresholds will be reintroduced for Net Positions.
Regulators Stabilizing Financial Markets
The Australian Securities & Investments Commission was the first financial governing institution to implement these measures amidst the coronavirus. The European Securities & Markets Authority quickly followed to ensure that their respective markets wouldn’t be shut down. It should be mentioned that ASIC created Equity Market Measures on March 16th, meaning further steps were taken to ensure the safety of investors and national corporations.
It’s expected that the European Union and the United States will implement similar strategies by March 20th to 31st. Never before have financial markets battled a global health pandemic of this nature, prompting the immediate action of global financial governing institutions. It’s not surprising that ASIC and the ESMA implemented these temporary measures.