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The short selling regime in Poland - an update

As of 1 June 2015 the Polish short selling regime will finally be adjusted to the European short selling rules set out by Regulation (EU) No 236/2012 of 14 March 2012 on short selling and certain aspects of credit default swaps (the Regulation). This is the result of amendments to the Act on Trading in Financial Instruments dated 29 July 2005 (the Act) and the subsequent changes to the regulations of the Warsaw Stock Exchange (the WSE), which removed country-specific requirements for short sale transactions.

Polish-specific short selling regime finally removed

The Polish short selling regime will finally be adjusted to the Regulation on 1 June 2015. Even though the Regulation has applied directly in Poland since 1 November 2012, Poland has maintained its own country-specific provisions concerning short selling, which were inconsistent with the Regulation.

These inconsistencies concerned both Polish statutory provisions and the WSE regulations. Under the country-specific provisions, investment firms short selling shares on the WSE were obliged, among others, to:

  • place short sale orders regarding the shares in a limited number of companies, the names of which were published by the WSE; and
  • flag short sale orders which were placed regarding these shares.

Only recently were the necessary changes introduced to Polish law and the WSE regulations. On 30 January 2015 the amendments to the Act entered into force, thereby adjusting it to the Regulation. These changes were subsequently reflected in a resolution adopted on 26 February 2015 by the supervisory board of the WSE which amended the WSE Rules. The Polish Financial Supervision Authority approved the changes to the WSE Rules and on 29 April 2015, and the management board of the WSE adopted a subsequent resolution amending the Detailed Exchange Trading Rules of the WSE. As a result, all provisions concerning short selling transactions were removed from the WSE regulations.

These amendments will effectively apply starting from the trading session on 1 June 2015.

As of this date, the WSE will cease to set out and publish the list of financial instruments which may be the subject of a short sale transaction. Investment firms placing short sale orders on the WSE will also no longer be obliged to flag short sale orders.

Legal and Regulatory Risk Note