MFA submitted a comment letter on January 10 to the European Securities and Markets Authority (ESMA) regarding the implementation of the Short Selling and Credit Default Swap Regulation. In our letter, we recommend, among other things, that ESMA and the European Commission:
- include convertible bonds in the calculation of a net short position,
- provide examples, for purposes of the restriction on uncovered sovereign CDS, in which the value of a particular portfolio of assets is “correlated” to the value of the particular sovereign debt, and
- adopt clear requirements for investors and other market participants to locate shares prior to engaging in a short sale.