SLIDE 1
Belgium, France, Italy and Spain Ban Short Selling in Securities of Certain Financial Institutions
Belgium, France, Italy and Spain have each introduced a ban on the short selling of certain securities with immediate effect. The decisions follow a volatile week in the European financial market and a failed attempt by the European Securities and Markets Authority to organize an EU-wide response. The bans each prohibit the creation of net economic short positions by any means whatsoever, including intraday and by the use of derivatives, in the capital of specified issuers and apply to any person, whether local or foreign. Existing net economic short positions are not covered but they may not be increased. The French, Italian and Spanish bans each apply for 15 days but may be extended if deemed necessary. Belgium has extended its current prohibition on uncovered transactions (“naked shorting”) in shares or derivatives executed on Euronext Brussels to include “covered shorting”, including where the relevant financial instruments are borrowed, by any means in Ageas, Dexia, KBC Group and KBC Ancora. The ban applies indefinitely. The French ban applies to net short positions “in the equity shares or securities giving access to the capital” of April Group, Axa, BNP Paribas, CIC, CNP Assurances, Crédit Agricole, Euler Hermès, Natixis, Paris Ré, Scor and Société Générale. The definition of “net short positions” is set out in Article 4 of the Autorité des Marchés Financiers (“AMF”) Instruction 2010-08, which can be found at the below link. The prohibition does not apply to “financial intermediaries acting as market makers or liquidity providers when they are operating under a contract with the relevant market undertaking or with the issuer concerned, or when acting as counterparty for block trades in equities.” Spain’s restriction affects shares in the following 16 financial institutions: Banca Cívica, S.A.; Banco Bilbao Vizcaya Argentaria, S.A.; Banco de Sabadell, S.A.; Banco de Valencia, S.A.; Banco Español de Crédito, S.A.; Banco Pastor, S.A.; Banco Popular Español, S.A.; Banco Santander, S.A.; Bankia, S.A.; Bankinter, S.A.; Caixabank, S.A.; Caja de Ahorros del Mediterráneo; Grupo Catalana de Occidente S.A.; Mapfre, S.A.; Bolsas y Mercados Españoles, S.A.; and Renta 4 Servicios de Inversion, S.A. It covers “any trade on equities or indices, including cash equities transactions, derivatives in regulated markets or OTC derivatives.” There is an exemption to the ban for market making activities of investment firms that incur “a transitory (especially intraday) net short position either (i) as a response or a hedge to a client order or (ii) as a result of quoting bid and ask prices on a continuous way as market members, with or without a public commitment with the issuer or the market.” The Italian ban applies to shares in the following 29 financial institutions: Azimut Holding; Banca Carige; Banca Finnat; Banca Generali; Banca Ifis; Banca Intermobiliare; Banca Monte Paschi Siena; Banca Popolare Emilia Romagna; Banca Popolare Etruria e Lazio; Banca Popolare Milano; Banca Popolare Sondrio; Banca Profilo; Banco di Desio e Brianza; Banco di Sardegna Rsp; Banco Popolare; August 15, 2011
Practice Groups: Investment Management Hedge Funds and Venture Funds Broker-Dealer