On November 1, 2012, E.U. Regulation 236/2012 (Regulation) came into effect, imposing reporting obligations on short sellers and regulating certain aspects of the credit default swaps market. In the wake of the 2008 global financial crisis, the primary goal of the Regulation is to provide E.U. regulators with sufficient transparency to ensure that member states are in a position to reduce systemic risk and financial instability related to short selling. See “Regulatory Uncertainty and Market Instability Put Short Selling Under Fire
” (Dec. 3, 2008). Compliance with the Regulation has been difficult for many short sellers, however, as the regulators have provided little guidance in this area. For example, short sellers with potential notification obligations often lack a definitive source of information to confidently calculate their net short positions. To help distill some of the issues surrounding the Regulation, the Hedge Fund Law Report recently interviewed Anna Lawry, counsel at Ropes & Gray, and Marye Cherry, E.U. regulatory counsel at Advise Technologies (Advise). In this article, Lawry and Cherry review certain mechanics of the reporting obligations and identify several gaps in the Regulation that are important for short sellers. On Wednesday, December 7, 2016, from 10:00 a.m. to 11:00 a.m. EST, Lawry and Cherry will expand on the topics discussed below and other challenges relating to the Regulation in a webinar presented by Advise, entitled “E.U. Short Sale Reporting
,” which will be moderated by William V. de Cordova, Editor-in-Chief of the HFLR. To register for the webinar, click here
. For additional insight from Advise, see our two-part series on how non-E.U. hedge fund managers can comply with E.U. private placement regimes: “Registration
” (Dec. 3, 2015); and “Reporting
” (Dec. 10, 2015).