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Short selling doubles in case of pandemic and CMVM imposes tight supervision - Stock Exchange

Short selling doubles in case of pandemic and CMVM imposes tight supervision – Stock Exchange

The year 2020 was marked by a significant increase in potential anomalies, forcing the Portuguese Securities Market Authority (CMVM) to strengthen communication with issuers. Most of these positions relate to taking short positions in corporate capital, as these holdings multiply in a pandemic year.

The Portuguese capital market regulator received 1,031 calls related to adjusted net short positions in 2020, nearly double the 568 positions reported in 2019, according to CMVM’s annual report released on Monday.

According to the document, “the adoption of changes, at the European level, in the control procedures related to the effects of the Covid-19 epidemic, that is, the reduction of the minimum notification of short positions each year, contributed to this increase. The competent authority.” After the ESMA decision is issued, all positions above 0.1% must be reported to the regulator (only short positions above 0.5% are reported to the market)

The pandemic forced the regulator to strengthen the monitoring of the capital market, in order to avoid greater stress situations caused by the coronavirus crisis. During the year, 526 potentially anomaly positions were identified, resulting in 93 contacts with issuers and managers.

“We constantly monitor the performance of investors with short positions in national issuers and the resilience of the prudential mechanisms of market structures,” CMVM says in its report. At the document presentation conference, the Chairman of the Council stressed, however, that these attitudes “have increased very dramatically, but not in a way that causes problems”.

The liquidity of investment funds was another issue that deserved the regulator’s attention, although there were no problems with redemptions by national fund managers.

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Gabriela Figueiredo Dias noted that asset management was “one of the areas that cause us the most concerns, without turning into problems”. CMVM regularly monitored “the risk of falling liquidity levels to the point where funds were not able to respond to paybacks,” but “none of this materialized. There was daily monitoring and control of CMVM.” who stays.

In terms of investor complaints, CMVM received 422 complaints last year, which is a 5% increase compared to 2019. However, according to the report, “compared to the average of the past 10 years, the decline is 50% which is justified by the During changes in the complaints procedure, pension funds and associated unit depart from the CMVM’s area of ​​competence and influence, in previous years, cases involving entities subject to settlement measures (the BES and Banff case).