Legal Framework


Consob resolution No. 17993 of November 11, 2011

  Measures on short sales aiming at ensure the orderly conduct of trading and the integrity of the markets

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 Consob Resolution no. 17862 of July 10, 2011, whereby Consob, in order to ensure the orderly conduct of trading and the protection of investors, temporarily introduced measures on reporting obligations of net short positions held on shares;

 

Having regard to Consob Resolution no. 17902 of August 12, 2011, whereby Consob, in order to ensure the orderly conduct of trading and the protection of investors, temporarily introduced restrictive measures on net short positions with reference to the sharecapital of issuers included in the list published on Consob internet website;

 

Having regard to Consob Resolution no. 17911 of August 25, 2011, whereby Consob extended the effects of Consob Resolution no. 17862 of July 10, 2011 and Consob Resolution no. 17902 of August 12, 2011, respectively, until October 14, 2011 and September 30, 2011;

 

Having regard to Consob Resolution no. 17951 of September 28, 2011, whereby Consob extended the effects of Consob Resolution no. 17862 of July 10, 2011 and Consob Resolution no. 17902 of August 12, 2011, respectively, until November 11, 2011 and November 25, 2011;

 

Having regard to Consob Resolution no. 17992 of November 11, 2011, whereby Consob extended the effects of Consob Resolution no. 17902 of August 12, 2011;

 

Taking into account that the exceptional markets conditions justifying adoption of the measures included in the above mentioned Consob Resolutions still persists;

 

Taking into account that, at least under the above mentioned markets conditions, the reporting obligations of net short positions to competent authorities are useful;

 

Taking into account that uncovered short sales - remaining firm the restrictive measures on net short positions on shares of the financial sector introduced by Consob Resolution no. 17902 of August 12, 2011 and subsequent extensions - could contribute to increase the risk of fails and market volatility and that, in order to reduce this risk, it is appropriate to impose restrictions on the above mentioned sales;

 

Having regard to the agreement between the European Parliament, the European Council and the European Commission in order to adopt a Regulation of the European Parliament and of the Council on Short Selling and certain aspects of Credit Default Swaps;

 

Considering that the current extraordinary markets conditions make it necessary to adopt measures in order to prohibit uncovered short sales on shares and to require notification of net short positions held on shares and taking into account that similar measures are in force in other European countries and will be outlined in the European Regulation indicated in the above mentioned agreement;

 

R E S O L V E S:

 

1. Provisions of Consob Resolution no. 17862 of July 10, 2011 continue to apply even after November 25, 2011.
 

 

2. The sale of shares listed on Italian regulated markets, wherever carried out, and also when it does not fall within the restrictive measures on net short positions on shares of the financial sector introduced by Consob Resolution no. 17902 of August 12, 2011, and subsequent extensions, shall be supported by the availability by the ordering party, at the moment of the order, of the relevant securities.

 

3. Availability of the relevant securities is considered as acquired when the ordering party has, alternatively:

 

a. borrowed the share;

 

b. entered into an agreement to borrow the share; and

 

c. signed an arrangement with one or more third parties under which that third party has confirmed that the share has been located and that allows the ordering party to have reasonable expectation that settlement can be effected when it is due.

 

4. 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).

 

Provisions under point no. 2, 3 and 4 above of this resolution shall take effect from 00.00 a.m. of December 1, 2011 and until their amendment or revocation, possible at any moment due to modifications of markets conditions and, as far as possible, in agreement with other European competent authorities that adopted similar measures.

 

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

 

THE CHAIRMAN
Giuseppe Vegas

 

 

Milan, November 11, 2011