The European Commission has published a report sent to the European Parliament and the Council of the EU evaluating the Regulation on short selling and certain aspects of credit default swaps (the Regulation).
The Commission is required under article 45 of the Regulation to report to the Parliament and the Council on the appropriateness and impact of certain provisions of the Regulation. The report covers the:
- appropriateness of the notification and disclosure procedures;
- impact of individual disclosure requirements;
- appropriateness of direct, centralised reporting to the European Securities and Markets Authority;
- restrictions and requirements on the uncovered short selling in shares, sovereign debt and sovereign credit default swaps (CDS);
- functioning of the market making exemption under the Regulation; and
- intervention powers under the Regulation.
The Commission concludes that the Short Selling Regulation has had a positive impact in terms of greater transparency of short sales and reduced settlement failures but with a relatively mixed economic impact. There is no compelling evidence of a substantial negative impact of the Regulation in terms of reduced liquidity of sovereign CDS.
The Commission is of the view that it is too early, based on available evidence, to draw firm conclusions on the operation of the Regulation which would warrant a revision of the legislation at this stage. The Commission will therefore continue monitoring the application of the Regulation.
View Report from the Commission to the European Parliament and the Council on the evaluation of the Regulation (EU) No 236/2012 on short selling and certain aspects of credit default swaps, 13 December 2013