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|11/01/2016||2016/28||Emergency measure by the Greek HCMC under Section 1 of Chapter V of Regulation (EU) No 236/2012 on short selling and certain aspects of credit default swaps||Market Integrity, Short Selling||Opinion||PDF
Emergency measure by the Greek HCMC under Section 1 of Chapter V of Regulation (EU) No 236/2012 on short selling and certain aspects of credit default swaps
II.Previous measures adopted by the Hellenic Capital Market Commission (HCMC)
On the adverse events or developments
ESMA considers that adverse developments which constitute a serious threat to market confidence in Greece could be understood as having considerably decreased with the successful completion of the share capital increase of Attica bank as announced by that bank on the 30th December 2015. Attica Bank has been the last of the five banks to undertake the re-capitalisation process envisaged under Greek law. It represented less than 1 % of the total market capitalisation of the 5 re-capitalised banks before the Attica capital increase and less than 7% after the increase. It also stands for a very small fraction of the Greek banking sector. Not surprisingly, and unlike the other banks mentioned in paragraph 10 above, Attica Bank is not a significant supervised entity under the direct supervision of the ECB.
Although acknowledging that the successful and full conclusion of all the Greek banks’ re-capitalisation is important in order to safeguard the stability of the financial system as a whole and of the Greek capital market, as well as the protection of investors, ESMA considers that given that the capital increase of Attica Bank is agreed, priced, subscribed and publicly announced on the 30th of December 2015, the threat to the financial stability of the bank, and more widely to the financial stability of the Greek financial market, is much less acute than in December 2015.
ESMA notes that the trading of the newly issued shares further to the completed capital increase has not started yet and thus there is a risk of increased volatility in the relevant market and that the confidence in the concerned bank could be affected if price movements were extreme. However, the evolution of the stock price of Attica Bank during the last month does not point towards, on average, a significant downward pressure on the prices. The volatility observed on Attica Bank is relative to the currently volatile stock markets in the EU.
In the trading figures of Attica Bank shares since late November 2015, it is evident that the trading volumes have reduced progressively but the price of the stock has not suffered from a downward price spiral. Only in one occasion (10 December2015) the stock price fell more than 10% in a single session. In general, looking at the last 30 trading sessions, the price has increased by 37%. In the last 10 trading sessions, the price has moved in an overall range (counting intraday minimum and maximum values) of 13% around the average closing price of the period. In terms of closing prices, the maximum fluctuation has been -3,97% since 22 December (observed on January 7 2016). Putting these moves in the context of quite volatile EU stock markets, linked to the international market trends, it is questionable whether the volatility of the stock price of Attica Bank could be qualified as extreme or even high. Obviously, one could argue that the price has found a support thanks, among other things, to the existing ban on short sales. While it is extremely difficult to isolate the price effect of the short selling ban with current data, it is ESMA’s view that, all in all, the pricing history of the stock does not give the impression of a highly fragile situation.
The main risk related with extreme volatility in a re-capitalisation exercise arises when the issuance price of the new shares and the allotment of the volume to be subscribed is not yet complete. In that scenario, significant (downward) price movements can dis-incentivise the investors that were considering to subscribe to new shares or can affect the issuance price in a manner that the re-capitalisation (in terms of the effective amount of funds to be received by the bank) can be put at risk. Once the pricing and the subscription are firm, price moves have a much lower impact on the success prospects of a re-capitalisation. They mainly affect the willingness of the new investors to hold their new shares or to sell them when the new shares start to trade. But the effects of this process on the financial stability of the entity are much less direct than when the volatility scenario precedes the establishment of the price and of the allotment of the capital increase. The latter was the prevalent scenario in most of the other occasions in which the measures of the HCMC was extended and on which ESMA issued positive opinions in the past. In ESMA’s opinion, such scenarios should be distinguished from the case at hand.
The question of whether the risk of falling prices on Attica Bank shares (which has not yet been observed) would endanger the orderly functioning of the whole Greek financial market and its integrity is not evident to ESMA, due to the small size of this particular institution and to the fact that the only pending element is the formal admission to trading of the new shares.
On the appropriateness and proportionality of the proposed measure
ESMA considers that the renewal of the emergency measure limited to the shares of Attica Bank is not appropriate and proportionate to address the above mentioned potential threat stemming from the volatility of the price of the market of Attica Bank shares. Given that the share capital increase of Attica Bank is firm and definitive as well as publicly known, ESMA considers that the prohibition of short sales in the shares of Attica Bank admitted to trading on the Athens Exchange will only serve the purpose of assisting in reducing market volatility until the final admission of the new shares and the first days of their trading. While this may be a positive goal, ESMA notes that the situation of Attica Bank is very different from the ones of the other Greek banks both in terms of quantitative significance with respect to financial stability (much smaller in the case of Attica Bank) and in terms of the timing in the process of re-capitalisation (given that only the final listing of the new shares is pending, as opposed to the fixing of the issuance price and the allotment of the subscriptions).
ESMA is thus of the view that there are alternative tools and measures, including those provided by Article 23 of the Short Selling Regulation consisting in a short term restriction of short selling in case of a significant fall in price, to address extreme market volatility concerns, should this volatility materialise in the coming days and more specifically risks of a downward spiral of the price of Attica shares. Those measures would be in ESMA’s opinion more appropriate and proportionate to address the risks that would arise from that situation than a total ban on short sales.
On the duration of the proposed measure
Considering the above negative opinion on the appropriateness and proportionality of the measure, ESMA is not further assessing the duration of the proposed renewal.
|29/01/2013||2013/149||Emergency measure by the Greek HCMC under Section 1 of Chapter V of Regulation No 236/2012 on short selling and certain aspects of credit default swaps||Short Selling||Opinion||PDF
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|03/06/2020||ESMA71-99-1334||ESMA consults on cloud outsourcing guidelines||Innovation and Products||Press Release||PDF
|17/09/2012||2012/582||ESMA consults on market maker and primary dealer exemption for short selling||Short Selling, Press Releases||Press Release||PDF
|20/12/2019||ESMA71-99-1256||ESMA CRAs TRs thematic fees report||Press Releases, Supervisory convergence, Trade Repositories||Press Release||PDF
|24/05/2012||2012/330||ESMA finds high level of consistency in EU national regulators’ practices for the approval of investment prospectuses||Press Releases, Supervisory convergence||Press Release||PDF
|The European Securities and Markets Authority (ESMA) has published today “Prospectus Directive – Good Practices in the approval process“, a peer review report on the application of regulatory good practices by national supervisory authorities - competent authorities (CA) when approving investment prospectuses.The review was conducted using good practice criteria that ESMA developed on selected areas of the Prospectus Directive dealing with the approval process for investment prospectuses. The prospectuses provide investors with easy to understand and relevant information on investment products. Peer review reports on national regulators’ procedures contribute to ESMA’s objective of fostering supervisory convergence and achieving a level playing field between jurisdictions.|
|07/04/2016||2016/582||ESMA finds room for improvement in national supervision of investment advice to retail clients||MiFID - Investor Protection, Press Releases, Supervisory convergence||Press Release||PDF
|15/04/2021||ESMA71-99-1651||ESMA highlights need for increased efforts on EMIR and SFTR data quality||Market data, Press Releases, Securities Financing Transactions, Supervisory convergence||Press Release||PDF
|26/04/2012||2012/272||ESMA identifies divergence in Member States’ use of sanctions under the Market Abuse Directive||Press Releases, Supervisory convergence||Press Release||PDF
|The European Securities and Markets Authority (ESMA) has published a report on the use of administrative and criminal sanctions by European Union (EU) national regulators under the Market Abuse Directive (MAD). The report provides a comparison of the use of administrative sanctioning powers across 29 EEA Member States for 2008-2010. The results of the report will provide input to the legislative process on the new market abuse regime.|
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|The European Securities and Markets Authority (ESMA) has published an opinion on structured retail products, setting out good practices for firms when manufacturing and distributing these products.|
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|31/05/2017||ESMA71-99-469||ESMA issues principles on supervisory approach to relocations from the UK||Brexit, Press Releases, Supervisory convergence||Press Release||PDF
The European Securities and Markets Authority (ESMA) has published an Opinion setting out general principles aimed at fostering consistency in authorisation, supervision and enforcement related to the relocation of entities, activities and functions from the United Kingdom. The opinion is addressed to national competent authorities (NCAs), in particular of the 27 Member States that will remain in the EU (EU27).
The opinion is a practical tool to support supervisory convergence in the context of increased requests from UK financial market participants seeking to relocate to the EU27. It covers all legislation referred to in the ESMA Regulation, in particular the AIFMD, the UCITS Directive, MiFID I and MiFID II.