From 1 November 2012 the European Regulation on Short Selling and on certain aspects of CDS shall apply (Regulation EU No. 236/2012). The Regulation introduces a notification regime of significant net short positions and restrictions on short sales in financial instruments.
For sovereign debt and sovereign credit default swaps the Regulation introduces:
a) notification obligations to the competent authority of significant short net positions on sovereign debt (article 7);
b) restrictions on uncovered short sales in sovereign debt and on uncovered sovereign credit default swaps (articles 13 and 14);
c) exemptions from the previous obligations and restrictions for market making activities and primary market operations in sovereign debt (article 17), upon notification to the competent authorities.
According to the new article 4-ter of the TUF (d.lgs 58/1998), introduced by the Decreto Sviluppo (d.l. 179/2012), Banca d'Italia and CONSOB are the competent authorities to receive the notifications, to enact the measures and to exercise the functions and ordinary powers foreseen by the Regulation; the Ministero delle Finanze e dell'Economia (MEF) is the competent authority for the powers of interventions in exceptional circumstances that it shall exercise acting on a proposal from Banca d'Italia, after consulting CONSOB.
Specifically the notifications of significant net short positions in sovereign debt and of the exemptions for market makers and authorised primary dealers in sovereign debt that intend to make use of the exemption have to be addressed to Banca d'Italia.
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