EU Regulation lifts Danish short selling ban

Finanstilsynet, the Danish FSA, has announced that the country’s ban on short selling of shares in Danish credit institutions has been lifted today, 1 November, because of the implementation of an EU Regulation.

The short selling ban was introduced on 10 October 2008, as the government moved to shore up the Danish financial system through the so-called Bank Package 1, which involved Danish taxpayer funded guarantees for financial institutions.

The EU Regulation bans naked short selling of shares and sovereign debt, because such activity is deemed to increase the risk of non-settlement and volatility, the Danish FSA said.

Where short selling is allowed, the Regulation requires that any positions of more than 0.2% of the relevant issued share capital must be reported to the Danish FSA. Subsequent changes of more than 0.1% must be submitted to the regulator until the position falls below 0.2%.

An additional reporting requirement applies where positions go above 0.5% of issued share capital. All short positions reported to the Danish FSA will be published via a database available here: http://oasm.dfsa.dk/

Regarding sovereign debt, Denmark has set the reporting threshold at 0.5% of outstanding debt, and any subsequent changes of 0.25% or more.

 

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