Short-Position Reporting and Governance

In the wake of the financial crisis, regulators around the world aim to increase market transparency and oversight of short-selling activities. As a result, market participants in the UK, Germany, Hong Kong and Australia are already required to report short positions in excess of prescribed reporting levels. From November 2012 onwards, the Pan-European Short Selling Disclosure Regime will come into force for all shares trading on European markets, multilateral trading facilities and over-the-counter.
 
In response, financial institutions need to streamline position management, tighten governance and improve reporting capabilities to comply with the new regulation.
 
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Regulators around the world are increasingly concerned about excessive risk in capital markets. Without governance and oversight, short selling can distort the value of financial instruments, increase returns volatility, contribute to disorderly markets and jeopardize macroeconomic financial stability.

Today, many financial institutions rely on a combination of equity monitor output and Excel-based manipulation to understand their short-selling activities and manage risk. These ad-hoc "systems" will not suffice in the new regulatory environment.
 
New regulatory demands will require financial institutions to adopt a less reactive and more strategic approach to short position management that integrates analytical and reporting capabilities.

The Accenture Short-Position Reporting and Governance Service offers a single, integrated view for managing short-selling operations and risks via implementing and automating analytical workflow.
 
A management information framework provides guidelines and policies for modeling units that are embedded with configurable rules engines and formable analytics models to help organizations trace portfolio exposure, track risk thresholds and automate reporting. The result is a flexible, reliable system for disclosing short positions across jurisdictions.