Extraterritorial Application of the EU Short Selling Regulation to German Shares and Government Bonds for Third-Country Firms

The scope of application of Regulation (EU) No 236/2012 (Short Selling Regulation, SSR) is extraterritorial, meaning it applies regardless of where the person (trading firm, investment fund etc.) that sells an instrument short is located—whether within the EU/EEA or in a third country such as the USA, the UK, Canada, Singapore, or Australia. Non-compliance with SSR obligations can result in penalties or administrative sanctions.

German penalties and administrative sanctions for infringements of the SSR

International firms should therefore have dedicated compliance and IT systems in place to be able to prove to the German supervisory authority BaFin that they have taken all reasonable measures to comply with SSR obligations.

Transparency Requirements for Net Short Positions

The Short Selling Regulation's transparency system encompasses notification and disclosure requirements for shares, sovereign debt, and sovereign credit default swaps.

Notification of net short positions relating to shares

Disclosure of net short positions relating to shares

Notification of net short positions relating to sovereign debt

Notification of uncovered positions in sovereign credit default swaps

Porhibition of Uncovered Short Sales

The Short Selling Regulation also encompasses a ban of uncovered short sales of shares, sovereign debt and sovereign credit default swaps (CDS).

Uncovered short sales in shares

Uncovered short sales in sovereign debt

Uncovered short sales in sovereign credit default swaps

Kronsteyn's Legal Services

Kronsteyn advises trading firms and fund managers on German financial market law, including securities trading law. The law firm assists its clients in navigating complex legal matters related to securities trading, providing legal opinions, communicating with BaFin, and implementing robust compliance systems. Kronsteyn also supports you with submitting notifications to BaFin or with publications at the Bundesanzeiger, if needed. For any inquiries, please contact Dr. Hendrik Müller-Lankow.