European registers on short selling

Short selling is the selling of a stock that the seller doesn’t own. Even more specific: a short sale is the sale of a security that is not owned by the seller, but that is promised to be delivered. When you short sell a stock, a broker will lend it to you. The stock will come from the brokerage’s own inventory, from another one of the firm’s customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later, you must “close” the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money. More information on the subject is available (written) by Brigitte Yuille at Investopedia.

On 1 November the new Regulation of the European Parliament and of the Council on short selling (and certain aspects of credit default swaps) became applicable in EU countries (Regulation documents). Many EU countries have now initiated registers where notifications are publicized on short sells. The website of the ESMA offers background information on the Regulation as well as a few links to files with inernet adresses for the registers. Many of these registers are easy to use and offer the notifications in an easy to use way (Excel or text downloads).

The short sell notifications usually comprise the following data: Position holder, Name of the issuer, ISIN, Net short position in % (2 decimal), Position date (yyyy-mm-dd). Sometimes the “Date on which the position was changed or ceased to be held” is also included. In the Netherlands the Notifications are collected and published in a separate Short Selling register (see below).

NB: Not all short sells are included in the registers: only when “A natural or legal person holding a net short position in the issued capital of a company whose shares are admitted to trading on a trading platform shall issue notification on each occasion that the position reaches the threshold of 0.5% of the issued capital of the company concerned and on each occasion that it reaches 0.1% above this level.”