The European Commission adopted the detailed rules aimed at reducing the risk of settlement failures linked to naked short selling, as well as the means by which market participants should disclose significant short positions to the market. Also, the new rules also detail how ESMA is to determine the shares which are exempt from the Short Selling Regulation by virtue of their principal trading venue being outside the Union.

The technical standards on short selling adopted by the European Commission are based on the work of the European Securities and Markets Authority (ESMA). As announced by the Commission itself, the detailed rules are aimed at reducing the risk of settlement failures linked to naked short selling, as well as the means by which market participants should disclose significant short positions to the market. The Commission underlines that these rules will help to create a more transparent, orderly and stable market by reducing the risks tied to short selling. In August 2011, ESMA called for harmonised regulatory action after short-selling ban in Belgium, France, Italy and Spain.

The rules notably specify the details of the so-called "locate rule," which ensures that short sales do not result in a failure to deliver, says the Commission. The new rules also detail how ESMA is to determine the shares which are exempt from the Short Selling Regulation by virtue of their principal trading venue being outside the Union.

The Implementing Regulation is part of a package of four implementing measures that the Commission will adopt to specify technical aspects of the Short Selling Regulation. The Implementing Regulation will enter into force on the day following its publication in the Official Journal of the European Union and shall apply from 1 November, except for the provisions on the principal trading venue, which shall apply from the date of entry into force.