ESMA_QA_1945

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/1945

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Regulatory Context

Regulation : SSR

Level 1 Regulation: Short Selling Regulation (SSR) Regulation (EU) No 236/2012

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Uncovered short sales

Subject Matter: Covering of a short sale on sovereign debt with a repo contract

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Question

Submission Date: 13 September 2012

Could a short sale on sovereign debt be considered covered by a repo contract executed in the days following the short sale but with the same settlement date as the short sale (e.g. a spot next repo for a T+3 cash sale)?

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ESMA Answer

Answer Date: 13-09-2012

[ESMA70-145-408 SSR Q&A, Q&A 10.8] Yes, it is possible to cover a short sale by entering into a repo contract afterwards provided that:    1/ prior to the short sale, the short seller entered into one of the arrangements with a third party under Article 13(1)(c) of the Regulation and Article 7 of the ITS (e.g. obtained an “easy to purchase sovereign debt confirmation” according to Article 7(5));    2/ the repo contract has an earlier or the same settlement date as the short sale, so that the delivery of the relevant sovereign debt can be effected when it is due.

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This document was automatically extracted from the ESMA EMIR Q&A database.