The European Commission adopted a Delegated Act which specifies the cases in which sovereign credit default swaps are considered covered, and therefore not banned in accordance with the Short Selling Regulation. In addition it includes rules relating to the reporting of short positions in shares and sovereign debt and the thresholds which can trigger a short term suspension of short selling in illiquid shares and other financial instruments.

The Delegated Act adopted by the Commission details rules on the ban on uncovered sovereign credit default swaps and short sales of shares and sovereign debt. According to the Commissioner responsible for internal market and services, Michel Barnier, the EU cannot tolerate speculation on uncovered sovereign credit default swaps. The delegated act adopted by the Commission will ensure that the ban is applied by market participants and enforced by regulators in a uniform way.

More particularly, it details rules on how to calculate the significant short positions that must be disclosed to regulators or the market; how short positions are calculated and reported by fund managers managing several funds, or different entities within a group; the levels at which short positions in sovereign debt must be notified to regulators; the thresholds for different financial instruments, ranging from illiquid shares to financial derivatives, which can trigger a short term suspension of short selling by regulators; the decline in liquidity which triggers the possibility for Member States to suspend restrictions on uncovered short sales of sovereign debt; and the criteria to be taken into account when determining what constitutes an adverse development or event.

The delegated act is part of a package of four implementing measures adopted by the Commission to specify technical aspects of the Short Selling Regulation. An implementing regulation concerning implementing technical standards and a delegated regulation on regulatory technical standards were already adopted by the Commission on 29 June. The package sets out all the technical details which the Commission is empowered to adopt by the Short Selling Regulation.