The AFM postpones rescission prohibition on short selling

From 16 to 23 February, the Netherlands Authority for the Financial Markets (AFM) conducted consultations concerning its intention to change its measures with respect to short selling. The AFM extends its temporary measures until 1 June 2009 at the latest as a precautionary measure. In the current extreme market circumstances, the AFM does not consider the immediate rescission of its prohibition on short selling advisable. The AFM will, however, proceed with the rescission prior to 1 June if market circumstances allow.

Many parties recognise the importance of short selling to the trade and speak out in favour of a rescission of the prohibition on short selling. Several other parties, however, point out the exceptional market circumstances and request extension of the measures. The AFM also conducted consultations with respect to its intention to maintain the duty to disclose significant short positions. The majority of the responses to the consultation is in support of the duty to disclose short positions.

The AFM will not consult market parties again on the adjustment of its temporary measures. It will continue to closely monitor market circumstances. International consistency also remains of great importance to the AFM. The AFM takes policy pursued by other European supervisory authorities into account in its decision to rescind the prohibition on short selling.

In addition, the AFM intends to increase the transparency of short positions. Recently, the FSA, the English supervisory authority, and the AMF, the French supervisory authority, presented proposals for permanent measures to increase the transparency of short positions. Within the context of the CESR, the AFM will continue to strive for international convergence of future measures intended to increase the transparency of short selling.

[Frequently asked questions]

The AFM promotes fairness and transparency within financial markets. We are the independent supervisory authority for the savings, lending, investment and insurance markets. The AFM promotes the conscientious provision of financial services to consumers and supervises the honest and efficient operation of the capital markets. Our aim is to improve consumers’ and the business sector’s confidence in the financial markets, both in the Netherlands and abroad. In performing this task the AFM contributes to the prosperity and economic reputation of the Netherlands.

The AFM is committed to promoting fair and transparent financial markets.

As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.

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