Legal Framework


Consob resolution No. 17862 of July 10, 2011

Measures on reporting obligations of net short positions on shares

THE ITALIAN COMPANIES AND STOCK EXCHANGE COMMISSION (CONSOB)

Having regard to Law 216 of June 7, 1974, as subsequently amended;

Having regard to Article 74, para. 1 and para. 3, of Legislative Decree No. 58 of February 24, 1998, according to which Consob shall supervise regulated markets with the aim of ensuring the transparency of the markets, the orderly conduct of trading and the protection of investors, by adopting, in cases of necessity and as a matter of urgency, all the measures required for the above-mentioned purposes;

Having regard to the importance of timely reporting net short positions on shares to the competent authority, in order to ensure the integrity of the markets and the orderly conduct of trading;

Having regard to the fact that the European Community is in the process of approving harmonised rules on transparency and reporting obligations on net short positions on financial instruments;

Having regard to the rules currently in force in France, Germany and United Kingdom on reporting of net short positions on shares;

Taking into account the exceptional conditions of the markets and, in particular, the high price volatility and trading trends on June 24, 2011 and on July 8, 2011;

Having regard to the fact that absence of reporting obligations on net short positions could sharpen speculation pressure on shares traded on Italian regulated markets;

Having regard to the fact that, considering the evolution of the market situation, it is necessary and extremely urgent to temporarily adopt reporting obligations to Consob of net short position held on shares in order to ensure the orderly conduct of trading and the protection of investors;

R E S O L V E S

  1. The persons holding a net short position related to the capital of a company whose main shares’ market is an Italian regulated market shall report to Consob when this position becomes equal or falls below the reporting thresholds, in compliance with the enclosed instructions.
  2. Reporting thresholds shall mean 0.2% of the issuer’s share capital and every subsequent variation equal to or exceeding 0.1% of the share capital.
  3. These provisions shall not apply to the activity carried out, in the exercise of their own functions, by market makers, nor to the activity carried out in regulated markets in the exercise of their own functions by specialists, as defined in the Rules of the regulated markets organised and managed by Borsa Italiana S.p.A., and by intermediaries acting in the performance of a liquidity contract (liquidity providers).

The provisions of this resolution shall take effects from 00.00 a.m. of July 11, 2011 to 24.00 p.m. of September 9, 2011.

This resolution is published on the web-site and the Bulletin of Consob.

Rome, July 10, 2011

THE CHAIRMAN
Giuseppe Vegas


Instructions related to Consob Resolution no. 17862 on reporting obligations of net short positions on shares

Persons affected

Persons affected are any natural person, legal person or other entity, Italian or not, holding a net short position on shares having an Italian regulated market as main market.

Reporting methods

The net short position shall be calculated at the end of the trading day and the relevant report shall be notified to Consob by 3.30 p.m. CET of the following trading day. This is done by notification of the enclosed model by:

End day positions shall be calculated with reference to the transactions carried out, even when not settled.

First reporting shall be communicated by 3.30 p.m. CET of July 12, 2011 with reference to net short positions held at the end of the trading day July 11, 2011.

Calculation of the net short position

Net short position is the downward position calculated with reference to the number of shares and shall take into account: (i) short positions – i.e. actual sales of shares (not yet settled) and potential sales arising from downward position on derivatives financial instruments; to the net (ii) of long positions – i.e. shares actually held, actual purchases of shares (not yet settled) and potential purchases arising from upward position on derivatives financial instruments, irrespective of the trading venue. This is calculated applying the relevant delta for each instrument held. The delta is calculated using the closing price of the underlying shares.

As for the reporting obligation, the net short position shall be a percentage of the reference issuer’s share capital. In this ratio, the denominator is equal to the number of shares issued by each issuer.

When a variation of the delta in a particular day entails crossing one of the thresholds, the relevant net short position shall likewise be reported to Consob.

In the event of a capital increase, the relevant shares are considered to be issued the first trading day following the end of the offer period. In the event of a capital increase with option rights, the above options right shall be considered in order to calculate net short positions.

In general, natural or legal persons shall calculate a sole net short position.

However, with reference to legal entities with different investment decision centres, the following instructions apply:

  • with reference to management companies and other legal entities, Italian or not, managing more funds and/or collective investment schemes and that, in relation to the same funds or schemes, apply independent strategies, the relevant net short position shall be calculated with reference to each fund, irrespective to the fact that the fund are linked to the same legal entity;
  • on the contrary, positions held by funds and/or collective investment schemes that apply the same strategy decided by the same subject, shall be consolidated in order to calculate the net short position;
  • in the same way, investment companies and other entities holding positions on financial instruments by two or more independent business units (e.g. trading activities carried out on its own account and on treasury account) shall calculate net short positions with reference to each unit.

Net short positions are calculated and consolidated at group level when investment decisions are unitary taken at that level or in case two or more entities belonging to the group act in concert.


NET SHORT POSITION NOTIFICATION MODEL

[Model PDF]

1. Declarant data

Complete name:
(denomination for legal persons; name and surname for natural persons)

Address:

BIC Code (if any):

Contact: (Name , Surname, telephone, email):

Information on the reporting person:
(Name , Surname, role, telephone, email):  

2. Information on the net short position

Data of the issuers to which the position relates
ISIN:
Denomination:

 

Reference Date
(dd-mm-yyyy)

 

Net short position held as of the reference date

reaches      exceeds      falls below

the threshold of:

□ 0.2%  □ 0.3%  □ 0.4%  □ 0.5%  □ 0.6%  □ 0.7%  □ 0.8%  □ 0.9%  □ 1.0%

□ (in case of higher thresholds, specify)

As of the reference date the net short position held is equal to

________% (approximate to the second decimal number)

Date of the precedent communication:
(dd-mm-yyyy)

 



Date_______________                                      Signature_______________