ESMA Publishes Q&A on Short Selling and CDS Regulation (Including Cross-Border Application)

The European Securities and Markets Association has published a Q&A on the implementation of the regulation on short selling and certain aspects of credit default swaps, which is due to enter into force on November 1, 2012.

The Q&A is intended to encourage harmonization in supervisory approaches and practices amongst EU member state regulators on the requirements of the directive, as well as to inform market participants and investors. Amongst the issues tackled by the Q&A are the territorial scope, transparency requirements, and the enforcement regime under the new regulation.

Note that this document may be subject to further updates before November 1, 2012.

Lofchie Comment: U.S. readers of the Q&A may be particularly interested in the answers given in regard to cross-border application of the EU's rules. See page 8 of the Q&A. In short, for those who do not have the patience to read the bad news themselves, the EU takes the view that these rules apply even to persons that have no contact whatsoever with the EU other than by reason of trading EU securities. In short, we have the international community criticizing the CFTC for its cross-border rules; and we have the EU adopting trading rules that purport to apply in the United States. For those of us working in the financial industry, it is clear that we have been granted our wish to live in interesting times.