On October 27, the Commissione Nazionale per le Società e la Borsa (CONSOB), the Italian securities regulator,  issued an emergency short selling measure under the European Union’s Short Selling Regulation (Regulation 236/2012). The emergency measure consists of a ban on the creation of new net short positions and a ban on the increase of existing net short positions on shares issued by Banca Monte dei Paschi di Siena spa and Banca Carige spa.

The ban was introduced following the announcement on October 26 of significant regulatory capital shortfalls for both Banca Monte dei Paschi and Banca Carige in the results of the European Central Bank’s (ECB) comprehensive assessment.

Under the Short Selling Regulation, within 24 hours of notification of a short selling measure by any EU regulator, the European Securities and Markets Authority (ESMA) must issue an opinion on whether it considers the measure necessary to address exceptional circumstances facing the issuer(s) in question. ESMA has confirmed that it is of the view that the measure notified by the CONSOB is appropriate and proportionate to minimize the risk of a loss of market confidence on these shares, reduce the risk of a contagion effect to other shares of the Italian banking sector, address adverse developments in the Italian markets, and that the duration of the measure is justified.

The measure entered into force on October 27 following the publication of ESMA’s opinion, and is expected to be applicable until the end of the day on November 10.

For the CONSOB measure, please click here.

For ESMA’s opinion, please click here.

For the ECB’s assessment of EU banks, please click here.