At the height of the financial crisis, in September 2008, short selling erupted on the European Union’s agenda when a number of Member States imposed restrictions of varying types on short sales in an effort to shore up financial stability. However, measures adopted by Member States were divergent as the Union lacked a specific regulatory framework for dealing with short selling issues. In autumn 2012, in order to ensure the proper functioning of the financial markets and greater coordination and consistency between Member States where measures have to be taken in exceptional circumstances, the EU legislator adopted a Regulation aimed at harmonizing the rules on short selling and certain aspects of credit default swaps. The Regulation introduced a regime based on four main pillars: a) restrictions on uncovered transactions; b) transparency obligations; c) exemptions from restrictions on uncovered transactions and transparency obligations; d) intervention powers conferred upon national competent authorities and ESMA in exceptional circumstances. The adoption of the EU short selling Regulation has had positive impact both on market conditions and on the activities of national competent authorities.
