General Decree of BaFin on Short Selling (expired by the end of 31 January 2010)
- As published in the announcement of:
- 19. September 2008
Please note that the General Decree is solely convenience translation for information purposes only. The original German text is binding in all respects.
1. Transactions that result in a short position or in an increase in a short position (known as short sales) are hereby banned in shares issued by the following companies from the financial sector
- AAREAL BANK AG
- ALLIANZ SE
- AMB GENERALI HOLDING AG
- COMMERZBANK AG
- DEUTSCHE BANK AG
- DEUTSCHE BÖRSE AG
- DEUTSCHE POSTBANK AG
- HANNOVER RÜCKVERSICHERUNG AG
- HYPO REAL ESTATE HOLDING AG
- MLP AG
- MÜNCHENER RÜCKVERSICHERUNGS-GESELLSCHAFT AG
Short positions arise when at the time of the transaction the seller of the shares
• does not own such shares, or
• at the time of the conclusion of the transaction does not have any absolutely enforceable legal claim under the law of obligations or under property law to be transferred title in shares of the same class, or does not have any absolutely enforceable legal claim under the law of obligations or under property law that results in the title in shares of the same class being transferred.
2. Name-to-follow transactions (Aufgabegeschäfte) by lead brokers (Skontroführer) are exempted from this ban. The same applies for transactions of persons who have undertaken by contract to make binding buy and sell bids (e.g. market makers, designated sponsors) to the extent that such transactions are required for performance of their contractual obligations. Also exempted are short sales used to secure already existing positions. Further exemptions may be permitted upon written application.
3. This ban shall apply until 31 December 2008, 24.00 hrs.
4. This General Decree is issued subject to reservation of revocation pursuant to section 36 (2) Administrative Procedures Act (Bundesverwaltungsverfahrensgesetz – BVwVfG) as well as in conjunction with the reservation of requirements being subsequently incorporated, amended or supplemented.
5. The Decree shall be deemed announced on the day following the customary announcement.
Grounds:
The Decree is based on section 4 (1) Securities Trading Act (Wertpapierhandelsgesetz – WpHG).
In the context of the latest developments on the global capital markets, particularly the collapse of several banks of international significance, an unusual volatility has been observed. This above all concerns the shares of credit institutions, operators of stock exchanges, insurance companies and other companies from the financial sector.
To maintain orderly trading in the shares of such companies, bans on short sale transactions have been issued in individual jurisdictions – notably in the US and the UK.
Given the close interdependence of the financial markets it is likely that without this Decree serious adverse effects would result for the conduct of orderly trading on local markets.
Particularly given the current state of the capital markets, an influencing of the market prices of shares of certain credit institutions, stock exchange operators, insurance companies and other companies from the financial sector is resulting in excessive price movements that could jeopardise the stability of the financial system and thus lead to serious disadvantages for the financial market.
The reservation of revocation ensures that BaFin can respond promptly to market changes.
The ban is appropriate and necessary to preserve and strengthen the trust of market participants in the effective functioning of the capital market.
A more moderate measure cannot be envisaged.
The exemptions give due regard to the justified interests of the market participants in using hedging instruments.
Pursuant to section 4 (7) WpHG, objections and annulment actions do not have any suspensive effect.
Instruction on available remedies:
It is possible to object to this Decree within one month of its issuance. The objection must be submitted in writing or for recording with the Federal Supervisory Authority in
Lurgiallee 12, D-60439 Frankfurt am Main,
or
Graurheindorfer Str. 108, D-53117 Bonn.
Note:
In the case of special urgency, it is advisable to direct applications pursuant to no. 2 of this Decree by fax to the fax number
+49 (0) 228 4108-2852.