Short selling and reporting of short positions

The notification obligation for short selling aims to increase the transparency of short positions, reduce settlement risk, and reduce the risk of instability as a result of uncovered credit default swaps. The Short Selling Regulation shall also ensure that member states have sufficient powers to intervene in situations where there is a risk of instability as a result of short selling and credit default swaps.

Obligation to notify net short positions

SSR imposes an obligation on investors to notify large net short positions in shares listed on a regulated market or a multilateral trading facility (‘MTF’), sovereign debt and some credit default swaps. SSR also applies to equity certificates where relevant.

The relevant time for calculation of a net short position is at midnight at the end of the trading day. If the position represents 0.1% or more (see note below) of the issued share capital (shares) or equity (equity certificates), the position shall be notified to Finanstilsynet no later than at 15.30 the following trading day. For sovereign debt, the initial notification threshold is 0.1%, but this threshold is not fixed and can be changed each quarter depending on the issued debt (see Article 7 of the SSR, cf. Commission Delegated Regulation (EU) 918/2012, Article 21, etc.) For more information on the notification of short selling in sovereign debt, reference is made ESMA’s website.

Changes (increases or reductions) that equal 0.1% or more in short positions in shares must also be notified to Finanstilsynet. This means, for example, that if a net short position is changed from 0.3% to 0.4%, it shall be reported in the register. See SRR Articles 5, 7 and 8 for more information.

Notifications shall be made in Finanstilsynet's web portal ‘Short Sale Register’. Further requirements for notification and publication, are set out in Article 9 of the SSR and especially in Commission Delegated Regulation (EU) 2012/826 and Commission Implementing Regulation (EU) 2012/827.

Please note that Commission Delegated Regulation (EU) 2022/27, which lowers the notification threshold for net short positions in shares from 0.2 per cent to 0.1 per cent, has been implemented in Norwegian law with effect from 1 August 2023.

Public register for large net short positions

Net short positions in shares listed on a regulated market (Oslo Børs, Oslo Axess) or MTF (Euronext Growth) which equal or exceed 0.5% of the issued share capital, shall be published. Positions below 0.5% will not be shown or summarised in the public register. The data are published in the Short Sale Register and updated at around 15.30 every trading day. The same applies to equity certificates.

Types of obliged entities

The position holder is responsible for ensuring that data are reported to the Short Sale Register in a timely manner and with the right content. The reporting requirements apply regardless of whether the position holder is resident or established in Norway, the EU or in a third country.

Supervisory authority (‘relevant competent authority’)

The Norwegian Short Sale Register includes only net short positions in shares and equity certificates for which Finanstilsynet is the relevant competent authority (also referred to as RCA).

In practice, Finanstilsynet is the relevant competent authority for most shares listed on Oslo Børs, but there are exceptions. Which country's authority is the relevant competent authority for a particular share can be found by searching the FIRD database. Some shares may also be exempt from SSR reporting pursuant to Article 16 of the SSR if the main trading venue is located in a third country. The shares for which this is relevant are specified in ESMA's register for exempted shares

Prohibition against uncovered short positions

There is a general prohibition against uncovered short sales (see SSR Articles 12 to 15 etc.). The seller must have secured access to the relevant financial instrument so that delivery can take place on the settlement date. For shares, the necessary coverage can be obtained by entering into an agreement to borrow or another agreement. For more details on what qualifies as agreements to borrow or other agreements, see Article 12 of the SSR and Commission Implementing Regulation (EU) 2012/827.

Exceptions for market makers and primary dealers

SSR allows exemptions from several of the provisions for market makers and primary dealers. Those who fulfil the conditions for this and wish to use the exemption in SSR for market makers or primary dealers must notify Finanstilsynet at ssr@finanstilsynet.no not less than 30 calendar days before the person first intends to use the exemption.

See SRR Article 17 for more information about the conditions and the related process. Finanstilsynet shall inform ESMA about market makers and primary dealers who wish to make use of the exemptions, and ESMA publishes lists of such actors on its short selling website.

Reporting, supervision and sanctioning

Relevant short selling positions shall be reported to Finanstilsynet via a separate web portal: Short Sale Register.

Finanstilsynet supervises compliance with the rules on the reporting of net short positions and the prohibition against uncovered short sales. Infringement of the provisions may result in administrative pecuniary sanctions being imposed pursuant to Section 21-2 of the Securities Trading Act. Intentional or negligent infringement may be penalised by fines or imprisonment for up to one year under Section 21-15 (4) no. 2 of the Securities Trading Act. Finanstilsynet publishes decisions on administrative pecuniary sanctions here. 

Regulations

The obligation to report net short positions and the prohibition against uncovered short sales follow from:

• Short Selling Regulation (SSR) (Regulation EU 2012/236)
• Commission Delegated and Implementing Regulations (EU) 2012/826, 2012/827, 2012/918 and 2012/919

For further guidance see:

• ESMA's guidelines 2013/74 (on exemption for market making activities and primary market operations)
• ESMA's Q&A on SSR