• Professional News
  • 20 September 2013

Short positions must be duly notified

The Danish Financial Supervisory Authority has given a reprimand to a non-Danish company for exceeding the deadline for notifying its short position in financial instruments by one week.

In a new decision by the Danish Financial Supervisory Authority (FSA), a non-Danish company received a reprimand for failing to comply with the time limit for mandatory notification of short positions under the EU Short Selling Regulation.

Short selling is defined as the sale of securities which the seller does not own when entering into the sales agreement. In this type of transaction, the net position must be calculated no later than at midnight on the trading day the position was taken. The notification of short positions which reach or fall below a certain threshold value must take place by 3.30 pm at the latest on the following trading day via the Danish FSA's Database for company notifications (login with username and password).

In this specific case, the short position had been taken on a Friday, and the notification would therefore have to be made before 3.30 pm on the following Monday. However, the position was not notified until one week later.

The non-Danish company stated that the late notification was due to a misunderstanding as it had not been certain about which authority was the competent authority to notify. This, however, did not prevent the Danish FSA from giving the company a reprimand.

The rules on short positions
The rules on short selling are laid down in the Regulation no. 236/2012 on short selling and certain aspects of credit fault swaps.

According to the Regulation, short positions equal to 0.2 per cent of the issued share capital of a company admitted to trading in a regulated market or a multilateral trading facility in Denmark must be notified to The Danish FSA. Every subsequent change of 0.1 per cent above that must be notified until the short positions fall below the 0.2 per cent threshold value.

Short positions in shares equal to 0.5 per cent of the issued share capital must be disclosed to the public, including every subsequent change of 0.1 per cent above that until the short positions fall below the 0.5 per cent threshold value.

A position resulting from either of the following shall be considered to be a short position:

  • A short sale of a share or of a debt instrument issued by a sovereign issuer.
  • Entering into a transaction related to another financial instrument, where an effect of such transaction is to confer a financial advantage on the party entering into such transaction in the event of a decrease in the price or value of the share or debt instrument.

Under Executive Order no. 86 of January 2013, non-compliance with certain provisions of the EU Short Selling Regulation may be subject to penalty.

  • Copenhagen

    Langelinie Allé 35
    2100 Copenhagen

  • Aarhus

    Værkmestergade 2
    8000 Aarhus C

  • Shanghai Representative Office

    No.1440 Yan'an Middle Road, Suite 2H08
    Jing'an District, 200040 Shanghai, P.R. China

  • Bech-Bruun Law Firm P/S

    P +45 72270000
    F +45 72270027
    E info@bechbruun.com
    VAT number 38 53 80 71
    Cookie policy
    Legal Notice and Disclaimer
    Privacy Policy