On January 5, the European Securities and Markets Authority (“ESMA”) published a peer review report aimed at assessing how national competent authorities (“NCAs”) apply the exemption for market making activities foreseen in Article 17 of the Short Selling Regulation (SSR). The report reviewed whether the NCAs are applying the general principles and criteria of eligibility for the exemption in compliance with the corresponding ESMA Guidelines and to identify good practices.

The report concluded that all NCAs have dedicated resources and have designed processes to handle the notification of exemptions and the notification functions are staffed with capable, knowledgeable and committed staff and that there are a number of approaches taken by NCAs.

The report highlighted some areas for concern, including: NCAs are not properly seeking assurance, in advance, that market makers seeking an exemption comply with the organizational requirement of the ESMA Guidelines; and many NCAs are too reliant on monitoring by trading venues rather than monitoring by the NCAs themselves. Report.