Belgium, France, Italy and Spain Ban Short August 15, 2011 Selling - PDF document

Belgium, France, Italy and Spain Ban Short August 15, 2011 Selling in Securities of Certain Financial Practice Groups: Investment Institutions Management Hedge Funds and Belgium, France, Italy and Spain have each introduced a ban on the short selling of certain securities Venture Funds with immediate effect. Broker-Dealer The decisions follow a volatile week in the European financial market and a failed attempt by the European Securities and Markets Authority to organize an EU-wide response. The bans each prohibit the creation of net economic short positions by any means whatsoever, including intraday and by the use of derivatives, in the capital of specified issuers and apply to any person, whether local or foreign. Existing net economic short positions are not covered but they may not be increased. The French, Italian and Spanish bans each apply for 15 days but may be extended if deemed necessary. Belgium has extended its current prohibition on uncovered transactions (“naked shorting”) in shares or derivatives executed on Euronext Brussels to include “covered shorting”, including where the relevant financial instruments are borrowed, by any means in Ageas, Dexia, KBC Group and KBC Ancora. The ban applies indefinitely. The French ban applies to net short positions “in the equity shares or securities giving access to the capital” of April Group, Axa, BNP Paribas, CIC, CNP Assurances, Crédit Agricole, Euler Hermès, Natixis, Paris Ré, Scor and Société Générale. The definition of “net short positions” is set out in Article 4 of the Autorité des Marchés Financiers (“AMF”) Instruction 2010-08, which can be found at the below link. The prohibition does not apply to “financial intermediaries acting as market makers or liquidity providers when they are operating under a contract with the relevant market undertaking or with the issuer concerned, or when acting as counterparty for block trades in equities.” Spain’s restriction affects shares in the following 16 financial institutions: Banca Cívica, S.A.; Banco Bilbao Vizcaya Argentaria, S.A.; Banco de Sabadell, S.A.; Banco de Valencia, S.A.; Banco Español de Crédito, S.A.; Banco Pastor, S.A.; Banco Popular Español, S.A.; Banco Santander, S.A.; Bankia, S.A.; Bankinter, S.A.; Caixabank, S.A.; Caja de Ahorros del Mediterráneo; Grupo Catalana de Occidente S.A.; Mapfre, S.A.; Bolsas y Mercados Españoles, S.A.; and Renta 4 Servicios de Inversion, S.A. It covers “any trade on equities or indices, including cash equities transactions, derivatives in regulated markets or OTC derivatives.” There is an exemption to the ban for market making activities of investment firms that incur “a transitory (especially intraday) net short position either (i) as a response or a hedge to a client order or (ii) as a result of quoting bid and ask prices on a continuous way as market members, with or without a public commitment with the issuer or the market.” The Italian ban applies to shares in the following 29 financial institutions: Azimut Holding; Banca Carige; Banca Finnat; Banca Generali; Banca Ifis; Banca Intermobiliare; Banca Monte Paschi Siena; Banca Popolare Emilia Romagna; Banca Popolare Etruria e Lazio; Banca Popolare Milano; Banca Popolare Sondrio; Banca Profilo; Banco di Desio e Brianza; Banco di Sardegna Rsp; Banco Popolare;

Cattolica Assicurazioni; Credito Artigiano; Credito Emiliano; Credito Valtellinese; Fondiaria – Sai; Generali; Intesa Sanpaolo; Mediobanca; Mediolanum; Milano Assicurazioni; Ubi Banca; Unicredit; Unipol; and Vittoria Assicurazioni. It does not apply to “the activity carried out, in the exercise of their own functions, by market makers, nor to the activity carried out in regulated markets in the exercise of their own functions by specialists, as defined in the Rules of the regulated markets organised and managed by Borsa Italiana S.p.A., and by intermediaries acting in the performance of a liquidity contract (liquidity providers).” The UK’s Financial Services Authority does not have current plans to impose a similar ban on short selling of financial institution securities in the UK. The national regulators’ announcements may be found at the following links:  Belgium http://www.fsma.be/en/OtherNews/Article/press/div/2011-08-11_shortselling.aspx o FSMA FAQ’s http://www.fsma.be/en/Article/faqmm/FAQ1.aspx  France http://www.amf-france.org/documents/general/10109_1.pdf o AMF Instruction 2010-08 http://www.amf-france.org/documents/general/9738_1.pdf o AMF FAQs http://www.amf-france.org/documents/general/10111_1.pdf  Italy http://www.consob.it/mainen/press_release/comunicato_20110710.htm o CONSOB Resolution no. 17862 http://www.consob.it/mainen/documenti/english/resolutions/res17862.htm  Spain http://www.cnmv.es/loultimo/short%20ban.pdf Please note that the regulatory bans described above are subject to change at any time. Authors: Philip J. Morgan philip.morgan@klgates.com +44.20.7360.8123 Alice N. Bell alice.bell@klgates.com +44.20.7360.8304 2

3