On January 30, the European Securities and Markets Authority (ESMA) published a second updated version of its questions and answers EU Regulation on Short Selling and Certain Aspects of Credit Default Swaps (EU236/2012) (the Short Selling Regulation) (the Q&A). The purpose of the Q&A (first issued on September 13, 2012, and updated on October 10, 2012, as reported in the October 12, 2012, edition of Corporate and Financial Weekly Digest) is to promote common supervisory approaches and practices among national securities markets regulators on the requirements of the Short Selling Regulation.

A new section addresses several issues relating to the restriction on uncovered sovereign credit default swaps.

Key changes in the updated Q&A address:

• The scope of the Short Selling Regulation, particularly the treatment of exchange-traded funds, American Depository Receipts and Global Depository Receipts;
   
• Various points regarding the net short position calculations, particularly with respect to fund management group entities; and
   
• Duration adjustment for calculating net short positions in sovereign debt.

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