From today there is a new air for short selling. Starting this morning, investors who hold significant short positions on shares traded on Italian regulated markets are required to notify Consob. The regulator institute, after a long afternoon of discussions that lasted until late at night, has launched a new measure to plug the landslide of the securities of listed Italian banks, led by Unicredit.
The provision, explains the authority, “strengthens Consob's supervisory powers in the current market phase, characterized by a high level of volatility in the trend of quotations. In particular, the net short positions relating to the shares of companies listed in Italy must be disclosed to Consob when they exceed certain quantitative thresholds. The first disclosure obligation is triggered upon reaching a net short position equal to or greater than 0,2% of the issuer's capital. Subsequently, the obligation is activated for each change equal to or greater than 0,1% of the capital». The measure will remain in force until September 9, 2011.
Assosim is satisfied, "it is an excellent compromise solution", he declared. A discipline based on transparency is better than a ban for the Italian association of securities brokers which believes that, in emergency situations, an obligation of disclosure is preferable to a ban.
Assosim also hopes that ESMA, the European market supervisory authority, will intervene in this regard "in order to extend the obligation to all intermediaries in the European Union and thus avoid the risk of regulatory arbitrage".
This afternoon, the former president of Consob Lamberto Cardia also spoke on the subject according to which short selling "in the presence of a serious crisis situation should be totally prohibited for the necessary period or at most allowed during the day" . For the former president, who in the aftermath of the collapse of Lehman Brothers limited short selling within three days, "a reduction of market movements for short periods is preferable rather than witnessing the serious damages that are caused to companies listed, also strategic for the country».
