On December 10, ESMA published a formal request it had received from the European Commission for technical advice on the observable effects of the Short Selling Regulation since its coming into force on November 1, 2012.

Amongst the specific questions ESMA has been asked to answer are:

           1. To what extent any temporary restrictions and bans imposed by competent authorities on short selling have had any positive effects;        
         2. To what extent the thresholds set for notification to national regulators and public disclosure are appropriate; and
         3. Whether the exemption for market makers allows for liquidity provision without undue circumvention.

The European Commission is obliged to report on the issues above to the European Parliament and the Council by June 30, 2013.  It has asked ESMA to deliver its technical advice by May 31, 2013.  Market participants can expect ESMA to launch a consultation shortly, with a deadline for responses sometime in the spring of 2013.