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February 2012


LSEG Response to ESMA’s Consultation Paper on draft technical standards on the EU Regulation on short selling and certain aspects of credit default swaps

The London Stock Exchange has provided a response to ESMA’s consultation (2012/30) on the EU Regulation on short selling and certain aspects of credit default swaps.

In our submission we highlight the following points:

·         ESMA has been hampered in its ability to make evidence-based proposals because of a lack of sufficient time.

·         In the case of far reaching legislation such as this, ESMA should request sufficient time from the Commission, to enable it to deliver the best possible advice to high quality and credible standards.

·         Short selling plays an important role in ensuring the proper functioning of financial markets. It provides liquidity which reduces spreads, thereby providing better prices for investors and thus reducing the overall cost of capital for issuers.

·         ESMA’s proposals on the soft locate rules and borrowing requirements are unduly restrictive and in effect could amount to a hard locate, which is not mandated by the Level I requirements. 

·         We believe that the Level II requirements must be proportionate and designed to have as limited an effect as possible on liquidity, whilst still achieving the objectives of the locate rule.

LSEG Response to ESMA’s Consultation Paper on draft technical standards on the EU Regulation on short selling and certain aspects of credit default swaps(pdffile pdf - 318 KB)

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