The Financial Supervision Commission (FSC) has adopted amendments to Ordinance 16 on the conditions and procedures for the execution of margin purchases, short sales and lending of financial instruments. The amendments implement Regulation (EU) No. 236/2012 of 14 March 2012 (Regulation (EU) No. 236/2012).
The most important amendments are described in greater detail below:
- Transactions with shares admitted for trading on a regulated market in Bulgaria which may serve as collateral must be at least 15 transactions on average for the last 20 stock exchange sessions, replacing the previous requirement for at least 30 transactions on average.
- Additional financial instruments may serve as collateral for margin purchases and short sales:
- Shares admitted to trading on a regulated market in another EU member state and meeting the liquidity requirements of Regulation (EC) No 1287/2006 of 10 August 2006;
- Government bonds issued by EU members and with an investment credit rating assigned by an EU-approved rating agency.
- Investment intermediaries:
- Must report to the FSC about the concluded margin purchases and short sales on a monthly basis.
- May increase the stipulated initial and variation margin requirements for margin purchases and short sales.
- The regulated market in Bulgaria must announce net short positions that are opened on a monthly basis.
- The FSC shall be entitled to impose restrictions and prohibitions for execution of margin purchases and short sales in accordance with Regulation (EU) No 236/2012.
Impact on investors: The amended regulations for margin purchases, short sales and lending of financial instruments have been adopted with the aim to implement Regulation (EU) No 236/2012, facilitating margin purchases and short sales. The regulations will also allow additional financial instruments to serve as collateral and provide information for monthly reporting of margin purchases, short sales and net short positions.