Legal Framework


Resolution no. 21303 [1]

Temporary prohibition of taking and increasing net short positions in shares traded in the MTA Italian regulated market, pursuant to Article 20 of the Regulation (EU) of the European Parliament and of the Council no. 236 of 14 March 2012

LA COMMISSIONE NAZIONALE PER LE SOCIETA' E LA BORSA

HAVING REGARD TO Law no. 216 of June 7, 1974, as subsequently amended and integrated;

HAVING REGARD TO Regulation (EU) no. 236/2012 of the European Parliament and of the Council of March 14, 2012;

HAVING REGARD TO Article 4-ter(2) of Legislative Decree no. 58 of February 24, 1998, according to which Consob is appointed with the task to implement the measures and exercise the functions and powers provided by Regulation (EU) no. 236/2012 of the European Parliament and of the Council of March 14, 2012 with reference to shares, among others;

HAVING REGARD TO Article 12 of Regulation (EU) no. 236/2012 of the European Parliament and of the Council of March 14, 2012, which imposes restrictions on uncovered short sales in shares;

HAVING REGARD TO Article 20 of the above-mentioned Regulation (EU) no. 236/2012, which, inter alia, defines the power to adopt temporary restrictions on net short positions provided that certain conditions are met;

HAVING REGARD TO the positive opinion issued by ESMA pursuant to Article 27 of the above-mentioned Regulation (EU) no. 236/2012;

HAVING REGARD TO the ESMA Decision of 16 March 2020, which introduces a temporary requirement to notify to competent authorities net short positions equal to or higher than 0,1% of the issued shares capital of companies whose shares are admitted to trading on a regulated market;

TAKING INTO ACCOUNT that the abovementioned ESMA Decision refers to a measure other than the “restrictions on short selling and similar transactions” envisaged in this Resolution;

TAKING INTO ACCOUNT the relevant increase in volatility and the significant decrease in price of shares included in Attachment no. 1 of this Resolution, particularly since March 6th 2020;

CONSIDERING THAT the measures contained in Article 12 of the above-mentioned Regulation (EU) no. 236/2012 are no more sufficient;

CONSIDERING THAT the adoption of this Resolution cannot be deferred in view of preserving the orderly functioning of markets and the protection of investors;

CONSIDERING THAT in order to preserve market confidence it is needed to adopt temporary restrictions on net short positions in shares included in Attachment no. 1 of this Resolution;

CONSIDERING THAT this Resolution represents a proportionate measure to preserve the orderly functioning of markets, investors protection and market confidence;

RESOLVES AS FOLLOWS:

1. It is prohibited to take net short positions or to increase existing net short positions, regardless of the place where the transaction is executed and including intraday positions, in any of the shares included in Attachment no. 1 of this Resolution, under Article 20 of the above-mentioned Regulation, effective from the date of adoption of this Resolution for a three-month period.

2. The prohibition applies to any natural or legal person, irrespective of their country of residence, including when it is outside of the European Union.

3. It is clarified that, pursuant to Article 20(3) of the aforementioned Regulation, the above-mentioned prohibition does not apply to the activity of market making, as defined by Article 2(1)(k) of the aforementioned Regulation, provided that the entity performing the market making activity is included in the list published by ESMA.

4. Pursuant to Article 20(3) of the above-mentioned Regulation, the above-mentioned prohibition does not apply to the trading of index-related instruments, provided that the shares included in Attachment no. 1 of this Resolution do not represent more than 20% of the index weight.

5. Pursuant to Article 20(3) of the above-mentioned Regulation, the above-mentioned prohibition does not apply to the creation of, or increase in, net short positions when the short position is aimed exclusively at covering the risk stemming from the equity component of convertible bond previously purchased.

6. Pursuant to Article 20(3) of the above-mentioned Regulation, the above-mentioned prohibition does not apply to the creation of, or increase in, net short positions when the short position is aimed exclusively at covering the risk stemming from subscription rights previously purchased.

This Resolution is transmitted to ESMA and Borsa Italiana spa and published on the Consob website and Bulletin.

17 March 2020

THE CHAIRMAN
Paolo Savona


[1] This Resolution ceased to have effect as from 23,59 hours of 18 May 2020 by Consob Resolution no. 21367 of 15 May 2020.

Attachment No 1 - Shares affected by the ban to net short positions

ISIN SHARE NAME
IT0001008876 A.S. ROMA
IT0001233417 A2A
IT0001207098 ACEA
IT0001469953 ACOTEL GROUP
IT0001382024 ACSM-AGAM
IT0005350449 AEDES
IT0001384590 AEFFE
IT0001006128 AEROPORTO GUGLIELMO MARCONI DI BOLOGNA
IT0004720733 ALERION
IT0004359037 ALGOWATT
IT0005314635 ALKEMY
IT0001042297 AMBIENTHESIS
IT0004056880 AMPLIFON
IT0004998065 ANIMA HOLDING
IT0005241192 AQUAFIL
IT0004093263 ASCOPIAVE
IT0003261069 ASTALDI
IT0000084027 ASTM
IT0003506190 ATLANTIA
IT0001137345 AUTOGRILL SPA
IT0000084043 AUTOSTRADE MERID
IT0005119810 AVIO
IT0003261697 AZIMUT
IT0001268561 B&C SPEAKERS
IT0005187460 B.F.
IT0005244402 BANCA FARMAFACTORING
IT0001031084 BANCA GENERALI
IT0003188064 BANCA IFIS
IT0000074077 BANCA INTERMOBILIARE
IT0004776628 BANCA MEDIOLANUM
IT0003173629 BANCA SISTEMA
IT0005218380 BANCO BPM
IT0001033700 BASICNET
IT0004412497 BASTOGI SPA
IT0005108763 BCA CARIGE
IT0000088853 BCA FINNAT
IT0005218752 BCA MPS
IT0000784196 BCA POP SONDRIO
IT0001073045 BCA PROFILO
IT0001041000 BCO DESIO BRIANZA
IT0001005070 BCO SARDEGNA RISP
IT0001479523 BE
IT0001223277 BEGHELLI
IT0004222102 BIALETTI INDUSTRIE
IT0004095888 BIANCAMANO
IT0003097257 BIESSE
IT0005387995 BIOERA
IT0003217335 BORGOSESIA
IT0000066123 BPER BANCA
IT0005252728 BREMBO
IT0000066180 BRIOSCHI
IT0004764699 BRUNELLO CUCINELLI
IT0001347308 BUZZI UNICEM
IT0004329733 CAIRO COMMUNICATION
IT0003025019 CALEFFI
IT0003127930 CALTAGIRONE
IT0001472171 CALTAGIRONE EDIT
IT0005252207 CAMPARI
IT0005331019 CAREL INDUSTRIES
IT0001046553 CARRARO
IT0000784154 CATTOLICA ASS
IT0005244618 CELLULARLINE
IT0001128047 CEMBRE
NL0013995087 CEMENTIR HOLDING
IT0003023980 CENTRALE DEL LATTE D'ITALIA
IT0005010423 CERVED GROUP
IT0001446613 CHL
IT0003389522 CIA
IT0000070786 CIR
IT0005117848 CLASS EDITORI
NL0010545661 CNH INDUSTRIAL
IT0005136681 COIMA RES
IT0004105653 CONAFI
IT0004991490 COSE BELLE D'ITALIA
IT0003121677 CREDEM
IT0005319444 CREDITO VALTELLINESE
IT0001127874 CSP INT IND CALZE
LU0290697514 D'AMICO
IT0000076502 DANIELI & C
IT0004053440 DATALOGIC
IT0001431805 DEA CAPITAL
IT0003115950 DE'LONGHI
IT0003492391 DIASORIN
IT0001469995 DIGITAL BROS
IT0001044996 DOVALUE
IT0003372205 EDISON R
IT0001498234 EEMS
IT0005188336 EL.EN.
IT0003404214 ELICA
IT0001237053 EMAK
IT0005176406 ENAV
IT0003128367 ENEL
IT0004356751 ENERVIT
IT0003132476 ENI
IT0005084717 EPRICE
IT0005312027 EQUITA GROUP
IT0001157020 ERG
IT0003850929 ESPRINET
IT0004818297 EUKEDOS
IT0003895668 EUROTECH
NL0012059018 EXOR
IT0001477402 EXPRIVIA
IT0003198790 FALCK RENEWABLES
NL0011585146 FERRARI
NL0010877643 FIAT CHRYSLER AUTOMOBILES
IT0001498481 FIDIA
IT0003365613 FIERA MILANO
IT0004967292 FILA
IT0001415246 FINCANTIERI
IT0000072170 FINECOBANK
IT0000060886 FNM
IT0001487047 FULLSIX
IT0005023038 GABETTI
IT0005345233 GAROFALO HEALTH CARE
IT0004098510 GAS PLUS
IT0001398541 GEDI GRUPPO EDITORIALE
IT0003203947 GEFRAN
IT0000062072 GENERALI ASS
IT0003697080 GEOX
IT0004942915 GEQUITY
IT0005122400 GIGLIO GROUP
IT0005221517 GPI
IT0005311821 GUALA CLOSURES
IT0001250932 HERA
IT0005108219 I GRANDI VIAGGI
IT0001049623 I.M.A.
IT0005322612 IGD
IT0005283111 IL SOLE 24 ORE
IT0005359192 ILLIMITY BANK
IT0001413837 IMMSI
IT0005245508 INDEL B
IT0004552359 INTEK GROUP
IT0001078911 INTERPUMP GROUP
IT0000072618 INTESA SANPAOLO
IT0005090300 INWIT
IT0001077780 IRCE
IT0003027817 IREN
IT0001069902 ISAGRO
IT0003057624 IT WAY
IT0005211237 ITALGAS
IT0003411417 ITALIAN EXHIBITION GROUP
IT0005253205 ITALMOBILIARE
LU0556041001 IVS GROUP
IT0000336518 JUVENTUS FC
IT0001055521 LA DORIA
IT0004210289 LANDI RENZO
IT0003856405 LEONARDO
IT0005107492 LUVE
IT0005013013 LVENTURE GROUP
IT0004931058 MAIRE TECNIMONT
IT0003428445 MARR
IT0005042467 MASSIMO ZANETTI BEVERAGE
IT0001063210 MEDIASET S.P.A
IT0000062957 MEDIOBANCA
IT0001447348 MITTEL
IT0001080248 MOLMED
IT0004965148 MONCLER
IT0001469383 MONDADORI EDIT
IT0001447785 MONDO TV
IT0000066016 MONRIF
IT0004195308 MUTUIONLINE
IT0004819030 NETWEEK
IT0005385213 NEWLAT FOOD
IT0005366767 NEXI
IT0005330516 NOVA RE
IT0001350625 OLIDATA
IT0003683528 OPENJOBMETIS
IT0005138703 ORSERO
IT0005043507 OVS
IT0001467577 PANARIAGROUP
IT0003073266 PIAGGIO
IT0004007560 PIERREL
IT0003056386 PININFARINA SPA
IT0005337958 PIOVAN
IT0004240443 PIQUADRO
IT0005278236 PIRELLI & C
IT0004997984 PITECO
IT0005339160 PLC
IT0001352217 POLIGRAF. S. F.
IT0000086923 POLIGRAFICI EDIT
IT0003796171 POSTE ITALIANE
IT0003124663 PRIMA INDUSTRIE
IT0004176001 PRYSMIAN
IT0005054967 RAI WAY
IT0004724107 RATTI
IT0004931496 RCS MEDIAGROUP
IT0003828271 RECORDATI ORD
IT0001178299 RENO DE MEDICI
IT0005282865 REPLY
IT0005349052 RESTART
IT0004370463 RETELIT
IT0001402269 RISANAMENTO
IT0004297575 ROSSS
IT0003621783 S.S. LAZIO
IT0001042610 SABAF
IT0001029492 SAES GETTERS
IT0004604762 SAFILO GROUP
IT0005252140 SAIPEM
IT0003865570 SALINI IMPREGILO
IT0004712375 SALVATORE FERRAGAMO
IT0003549422 SANLORENZO
IT0000433307 SARAS
IT0005283640 SERI INDUSTRIAL
IT0003814537 SERVIZI ITALIA
IT0004729759 SESA
IT0005262149 SIT
IT0001206769 SOL
IT0003153415 SNAM
IT0000076536 SOGEFI
IT0004607518 STEFANEL
NL0000226223 STMICROELECTRONICS
IT0003153621 TAMBURI
IT0001424644 TAS
IT0005331001 TECHEDGE
IT0005162406 TECHNOGYM
IT0003497168 TELECOM ITALIA
LU0156801721 TENARIS
IT0003242622 TERNA
IT0004585243 TESMEC
IT0005037210 TINEXTA
IT0004513666 TISCALI
IT0004659428 TITANMET
IT0003007728 TOD'S
IT0000214293 TOSCANA AEROPORTI
IT0005390965 TREVI FIN IND
IT0005001554 TRIBOO
IT0001454435 TXT E-SOLUTIONS
IT0003487029 UBI BANCA
IT0005239881 UNIEURO
IT0004810054 UNIPOL
IT0004827447 UNIPOLSAI
IT0005239360 UNICREDIT
IT0001018362 VALSOIA
IT0003127898 VIANINI
IT0004922826 WIIT
IT0004171440 ZIGNAGO VETRO
IT0005395071 ZUCCHI

FREQUENTLY ASKED QUESTIONS ON THE TEMPORARY BAN ON NET SHORT POSITIONS OF 18 MARCH 2020

This is a series of responses to questions on the interpretation of the ban adopted by CONSOB on 18 March 2020. The FAQs may be updated and extended at any time. Please consult the latest version available on the CONSOB´s website at the following webpage:

http://www.consob.it/web/consob-and-its-activities/short-selling

Version of 18 March 2020

1. Who is subject to the prohibition?

The prohibition applies to any natural or legal person (hereinafter "investor"), irrespective of their country of residence, regardless of whether trading takes place in Italy or in another EU or non-EU country, on a trading venue or over-the-counter ("OTC").

The ban does not affect market making activities.

2. When will the prohibition come into force and how long will it be in force?

The restrictions will apply from the start of the trading day of 18 March 2020 until the end of the trading day of 18 June 2020. The restrictions could be lifted before 18 June 2020 according to market conditions.

3. To which financial instruments does the prohibition apply?

The prohibition applies to shares included in the list attached to the resolution (hereinafter “restricted shares”), as well as to related instruments included in the calculation of net short position, like saving/preferred shares, derivatives, depositary receipts, index-related instruments (see point no. 9 below).

The relevant provisions of Regulation (EU) no. 236/2012 on the calculation of net short position apply (i.e. Article 3 of Regulation no. 236/2012 and Articles 5, 6, 7 and 10 and Annex I and II of Commission Delegated Regulation no. 918/2012 and the relevant ESMA FAQs).

In short, the net short position is the sum of all short positions minus all long positions held by that investor in relation to restricted shares and related instruments.

By means of illustration, positions stemming from the following transactions, among others, shall be considered in the calculations:

  • purchases or sales of shares;
  • transactions in options, swaps, futures, contracts for difference, covered warrants, certificates.

Financial instruments which entail a bearish position, such as the purchase of put options, shall be considered as short positions.

Positions in derivatives have to be delta adjusted, according to Annex II, Part 1, of Commission Delegated Regulation no. 918/2012.

Fixed income instruments or instruments that give an exposure to the creditworthiness of any share issuers (such as credit default swap) shall not to be taken into account.

Borrowed or lent securities are not included in the calculation of the position. In particular, securities lending transactions whereby shares are lent shall not be considered as creating a short position for the lender. On the other hand, securities lending transactions whereby shares are borrowed shall not be considered as a long position for the borrower.

Special provisions apply to short positions backed by long positions in subscription rights and convertible bonds (see also point no. 12 below).

4. What does the investor need to check before entering into a transaction in relation to the restricted shares or related instruments?

The investor must ascertain that the intended transaction in the financial instrument does not create or increase a net short position in a restricted share. Special care must be taken when dealing in derivatives since positions shall be accounted on a delta-adjusted basis.

5. Are intraday net short positions allowed?

No, creating or increasing a net short position (whatever the type of transactions used) during the trading day is prohibited, even if the investor intends to close the position before close of business on that day.

6. What should be done by an investor who opened a net short position before the entry into force of the prohibition?

The prohibition only refers to creating or increasing a net short position. Therefore, the investor who opened a net short position before the entry into force of the prohibition can reduce it or keep it. Keeping a previous net short position unaltered does not infringe the prohibition. On the other hand, increasing a position after having reduced it is not allowed.

In case an investor had placed an order that is not executed by the time the prohibition has entered into force and, if executed, would create or increase a net short position, the investor must cancel that order.

See also point no. 8 regarding derivative instruments.

7. Does the prohibition apply to transactions in the concerned financial instruments executed outside an Italian market?

Yes, the prohibition applies regardless of the trading venue where the transaction is executed if it results in creating or increasing a net short position in a restricted share. Therefore, it applies to transactions carried out on a regulated market or an MTF within and outside Italy. Similarly, the prohibition applies to OTC transactions.

8. Is an investor allowed to create a net short position in a restricted share by using derivatives?

No, investors are not allowed to use derivatives to create or increase a net short position; they may only use derivatives to hedge, create or increase a net long position.

However, in case a net short position is increased passively due to a variation of the relevant delta, this is not considered an infringement to the prohibition.

Investors holding a net short position in a restricted share through expiring derivatives are not allowed to roll forward their position.

9. Are trades in index-related instrument that contain one or more restricted shares allowed?

Trading in index-related instruments (like futures and other derivatives, ETFs, certificates) is not affected by the restriction if the overall weight of the restricted shares in the index is equal to or lesser than 20%.

At the opposite, trading in index-related instruments is affected by the restriction when the overall weight of the restricted shares in the index is greater than 20%.

However, creating or increasing a net short position in a restricted share by combining transactions in index-related instruments and other transactions is prohibited. For instance, it is prohibited to implement a strategy consisting in:

  • selling futures contracts on an index whose underlying basket includes restricted shares, and
  • buying futures contracts on all/most of the securities included in the underlying basket of the index except for restricted shares.

It is up to each investor to be able to prove that the transactions on index -related instruments are not carried out to enter into short strategies over restricted shares and circumvent the restrictions.

Please note that if, due to index trading, a net short position in a restricted share reaches a relevant threshold (i.e. 0.1%, 0.2%, 0.3%, 0.4% of the issued share capital and so on), the position holder has the obligation to notify to Consob the change in the net short position. In this case, it is recommended that the position holder clarifies, in the field “comments” of the notification, that the variation in the position has been caused by index trading.

Please note that, following ESMA Decision of 16 March 2020, the minimum threshold for net short positions reporting of shares admitted to trading on a regulated market has been lowered to 0.1% of the share capital.

10. If a fund manager acts on behalf of multiple funds, should the calculation of the net short position be made at the fund-specific or manager level or both? What about groups?

The rules provided for in Regulation no. 236/2012 apply. Thus, the calculation has to be performed at the level of the managing company. In case of groups, the calculation has to be done both at the individual entity level and at the group level.

11. Are market makers exempted?

Yes, market making activities as defined by Article 2(1)(k) of Regulation No. 236/2012, are exempted from the ban, provided that the entity performing the market making activity is included in the list published by ESMA.

12. Can you clarify the treatment of subscription rights and convertible bonds?

As provided for in Consob Resolution, the restrictions do not apply to the creation of, or increase in, net short positions in a restricted share when the short position is aimed exclusively at covering the risk stemming from the equity component of convertible bond previously purchased which convert in that restricted share.

The same exemption applies to short positions in a restricted share aimed at covering the risk stemming from subscription rights previously purchased which give the right to subscribe restricted share yet to be issued.

This means that, for instance, an investor can buy subscription rights or convertible bonds and sell a corresponding number of underlying shares.

In determining the corresponding number of shares, the investor must calculate and apply the relevant delta (see point no. 3 above). Subscription rights and convertible bonds which have been exercised by the investor have a delta equal to 1.

In both cases, the investor should report to Consob the net short position stemming from such risk hedging activity. In this case, it is recommended that the investor clarifies, in the field “comments” of the notification, that the short position is backed by long positions in subscription rights or convertible bonds.

Please note that, following ESMA Decision of 16 March 2020, the minimum threshold for net short positions reporting of shares admitted to trading on a regulated market has been lowered to 0.1% of the share capital.

13. Enforcement – What would be the consequences of non-compliance with the prohibition?

According to Article 193-ter of the Italian Consolidated Law on Finance, anyone who breaches the measures adopted by competent authorities pursuant to Articles 20 of the Regulation no. 236/2012 can be fined from 25,000 euro to 2,500,000 euro. The fines can be increased depending on the personal qualities of the guilty subject, the entity of the product or profit gained by the illicit fact or by the effects produced on the market. The application of the fines entails the confiscation of the product or profit gained by the illicit fact.

Any additional question can be sent to: shortselling-service@consob.it.