On 16 March 2020 ESMA issued a decision which temporarily requires the holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority ("NCA") if the position reaches or exceeds 0.1% of the issued share capital of the relevant company after the entry into force of the decision.

This temporary measure obliges reporting at a lower threshold to that established in the Short Selling Regulation [1] for a period of three months. The measure applies immediately requiring net short position holders to notify the relevant NCA of their relevant positions as at the close of the trading session on Monday 16 March 2020. 

The temporary transparency obligations apply to any natural or legal person, irrespective of their country of residence. They do not apply to: (i) shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country; (ii) market making activities; or (iii) stabilisation activities in accordance with the Market Abuse Regulation [2].

In its decision ESMA states that it considers lowering the reporting thresholds to be a preliminary action that under the exceptional circumstances precipitated by the COVID-19 pandemic is essential to monitor developments in markets and that this measure can be used to evaluate and potentially gradually implement further regulatory responses if those prove necessary. In addition to this measure individual EU member states are also introducing specific measures relating to short selling.

[1] Regulation (EU) 236/2012.[2] Regulation (EU) 596/2014.