BIJLAGE 2
De meest gestelde vragen over de AFM maatregel inzake short selling d.d. 5 oktober 2008

(De vragen en antwoorden zijn alleen in het Engels beschikbaar)
The AFM has set out answers to frequently asked questions. We will continue to review this
information over time and may further update the list to address any other frequently asked questions
that arise. The list is not intended to be exhaustive and persons will need to consider how the
instrument applies to their particular circumstances taking into account that the purpose of the
measures is to prevent potentially abusive behaviour.
We have split the FAQs into a number of sections.
Introduction
1. Is this FAQ additional to the FAQ previously issued by the AFM in relation to this topic?
No. This is a new FAQ which replaces any previously issued FAQ by the AFM in relation to this topic
(latest version was dated 26 September 2008).
2. Is this FAQ different from the FAQ issued by the FSA in relation to this topic?
Yes.
General
3. At what time do the new short selling provisions come into force?
The provisions preventing short selling in financial companies came into effect at 12.01 hrs on
Sunday 5 October 2008. The provisions governing disclosure take effect at the same time.
4. When do these measures end?
The new provisions are currently set to cease to have effect on 3 November 2008.
5. Will the AFM extend these measures?
We will keep this under review in the light of market conditions.
6. Do the new prohibition and disclosure measures apply to both “covered” and “uncovered”
short positions?
Yes.
7. Have these measures changed the suspicious transaction reporting regime?
The reporting obligations under the suspicious transaction reporting regime (art 5:62 Wft) remain
unchanged, but these evidential provisions newly describe a behaviour that in the opinion of the AFM
constitutes market manipulation.
8. Can a person increase their net short position intra-day, provided that the disclosable position
held at the end of that day does not exceed the position disclosed at the end of the previous day?
No. Although only a significant (0.25% or above) net short position held at the end of a day requires
disclosure, the short selling requirements do not allow a person to actively increase their net short
position intra-day.

9. Are issuers of convertible bonds considered to be short selling for these purposes?
No.
10. Are there any exemptions to these new measures?
Market Makers are exempt from the new short selling measures. The term Market Maker is not linked
to the Euronext Rulebook. Our indicative view for the purposes of this instrument on market making is
as follows:
A Market Maker is an entity that, ordinarily as part of their business, deals as principal in equities
and/or derivatives (whether OTC, exchange-traded or on an MTF) in a way that ordinarily has the
effect of providing liquidity on a regular basis to the market on both bid and offer sides of the market
in comparable size. Trading in circumstances other than genuinely for the provision of liquidity is not
exempt.
This exemption covers Market Makers only when, in the particular circumstances of each transaction,
they are acting in that capacity. Market Makers are afforded a certain level of flexibility in anticipating
sales as long as this activity is genuine market making in line with its existing general levels of
business. Consequently, we would not expect Market Makers to hold significant short positions, other
than for brief periods. Proprietary trading strategies where the main intention is to create a short
position are not Market Makers and are not exempt.
Registration as a Market Maker with an exchange or trading platform is not relevant for the purposes
of this definition.
11. What will be the consequences of non-compliance with the new measures?
The competent authorities could take enforcement actions in case of non-compliance.
12. In the case of investment managers who act on behalf of clients, to whom do the short selling
measures apply?
Non-discretionary
Where an investment manager manages on a non-discretionary basis, both the short selling prohibition
and disclosure requirements apply to the client. The investment manager may make a net short
position disclosure on behalf of its client, but this disclosure must clearly identify that it is the client
who holds the disclosable position.
Discretionary
Prohibition
Where an investment manager manages on a discretionary basis and where client positions are
segregated from the investment manager and from each other in one or more accounts, the prohibition
applies at the level of the individual clients.
Where an investment manager manages collective investment schemes on a discretionary basis, the
prohibition applies at the fund level. Where the fund in question is an umbrella fund with a number of
sub-funds, the prohibition applies at the sub-fund level.
Disclosure
The disclosure obligation applies at the level of both the entity to which the prohibition applies and at
the level of the investment manager. The investment manager may make a net short position
disclosure on behalf of its client. In respect of itself, the investment manager is required to disclose its

aggregate net short position across all of the funds it manages on a discretionary basis.
Where a disclosure by an investment manager is the same as that being made for its client/fund/subfund, it is permitted to make a single disclosure provided that the disclosure makes it clear that it
applies to both parties.
13. How do the short selling requirements apply across different trading desks?
If trading desks within a firm are housed within the same legal entity, the aggregate position of the
legal entity (across all desks holding positions in financial companies) would be expected to apply for
these purposes, excluding positions taken under the Market Maker exemption.
14. When calculating a net short position sho uld financial instruments be accounted for on a
notional basis or a delta adjusted basis?
Any financial instruments should be accounted for on a delta adjusted basis.
15. What does “economisch belang gerelateerd aan het totaal geplaatst kapitaal van de financiële
onderneming” (economic exposure in the issued share capital of a company) mean?
It means any instrument (contracts for differences, spread bets, options, ADR’s, etc) giving rise to an
exposure, whether direct or indirect, to the total issued share capital of a financial company.
The issued share capital of a financial company would include ordinary shares and preference shares
but would exclude debt securities.
16. Should any holdings in a financial company that are held as part of a basket of shares or a
share index be included in any aggregation of a person's economic interest in the company?
Any economic interest held as part of a basket, index or exchange traded fund (‘ETF’) where the
predominance of the components in the basket, index or ETF are financial companies must be
included.
Market participants should be aware of their overall position and the effect of their trading strategy on
their net short positions in financial companies. For example, a short sale of a index that does not have
a predominance of financial companies within it, which creates a new or increased net short position in
one or more financial companies, on its own would be permitted. But, where a market participant
goes short in an index and offsets positions in that index, by going long in its constituents other than
one or more financial companies, he is not permitted to obtain a new or increased net short position in
one or more financial companies. This would apply to trading in any derivatives products relating to
an index.
Where an index is exempt from the prohibition on short selling because the predominance of its
components are not financial companies, it is not necessary to take into account the financial company
components of the holding in the index when making calculations to determine whether there is an
obligation to disclose net short positions.
17. Is stock lending caught by the prohibition?
No, the AFM is not imposing any additional restrictions on stock lending activities. However, we
would urge firms that do lend stock to be vigilant and, where they suspect that stock is being borrowed
for the purpose of prohibited short selling, to alert the AFM.
NB, in making this call for vigilance, the AFM is not seeking to extend the current suspicious
transaction reporting regime under article 5:62 Wft.
Stock lenders should also note that a sale of lent stock would not create a short position for the stock
lender but would for the borrower.
18. If I transfer a short position from one counter-party to ano ther with no change in the net

short position would this constitute market abuse?
Where the position is transferred to the new counterparty on the same terms it will not be treated as
creating or increasing a net short position. Any net short position will still be subject to the new
disclosure requirements.

Derivatives
19. How do these provisions apply to derivatives?
Any derivative trades that are either delta neutral or delta positive at the time the orders are entered
into are permitted.
Please be aware that when rolling derivative positions expire, the delta position should not create a
new overall net short position in a financial company.
Prohibition
20. Which financial companies are subject to the prohibition?
We have published a list of financial companies as attachment to our measure dated 5 October 2008.
The list has been prepared on a best endeavours basis.
21. Is all short selling in financial companies prohibited?
No. Persons are prohibited from entering into transactions that have the effect of creating a new net
short position in a financial company post 4 October 2008, or from increasing a net short position that
was held before 5 October 2008. This means that it is still possible to hold a net short position
established before 5 October 2008. It also means that it is possible to short a financial company post 4
October 2008, provided that the person can offset the short position with an equivalent long position in
relation to that same company.
It should also be noted that any net short position that arises or increases, not as a result of any
additional transaction, but due to a change in delta as a result of changing market conditions, is not
caught by the prohibition (but may require disclosure if it is 0.25% or more as a disclosable net short
position).
22. In the context of a merger, is it permissible to offset one stock against another, i.e. by going
short in the offeree and long in the offeror?
No, until the merger is complete, positions in the companies involved should be treated separately for
the purposes of calculating net short positions. Accordingly, if the result of the transaction is to create
a new net short position in a financial company post 4 October 2008, or increase a net short position in
a financial company that was held before 5 October 2008, this is not permitted.
23. Can I hedge a long position in the convertible bonds of a financial company by taking a short
position in the equity of that company?
Yes, provided that this does not create a new or increased net short position in that company.
24. Does the prohibition also cover OTC transactions?
Yes.
25. Does the prohibition cover trading in Credit Default Swaps?
No.
26. Will the notice apply to listings of financial companies traded on trading platforms in other
countries?
Yes, the notice applies to all transactions executed in or from The Netherlands.

27. Does the prohibition apply at the same threshold as the disclosure requirement?
No. The disclosure requirement applies where a person holds a net short position of 0.25% or above.
The prohibition applies where a person enters into a transaction that creates a new net short position in
a financial company post 4 October 2008 or increases a net short position in a financial company that
was held before 5 October 2008.
28. Does this prohibition apply to orders entered prior to 00.01 hrs on 5 October 2008?
No.
Disclosure
29. In the case of investment managers who act on behalf of clients, to whom do the disclosure
measures apply?
See FAQ 12.
30. Why is disclosure required if there is a general prohibition against creating or increasing a
net short position?
The notice sets out that a person may have a disclosable interest despite the prohibition on short
selling because they had a disclosable short position before 5 October 2008 or because they had a net
short position before that date which due to other extraneous factors becomes a disclosable net short
position.
31. How is the relevant denominator calculated?
The relevant denominator for the calculation of net short positions is the total issued share capital of
the financial company comprising ordinary shares or preference shares. See also the AFM website
(www.afm.nl)> Public database> Notifications> Issued Capital> Search
32. Should positions held on trading platforms in other countries be included in the numerator?
Yes.
33. To whom does the disclosure responsibility apply (e.g. the financial company or the holder of
the short position in that company)?
The disclosure obligation applies to the holder of the net short position. See also FAQ 10.
34. In what format must the disclosure be made?
The disclosure must be made by means of a "Notification form short position" on the AFM website.
35. What is the process for making a disclosure?
To make a disclosure, the notification form can be sent by fax or e-mail and postal mail to:
Netherlands Authority for the Financial Markets (AFM)
Disclosure & Registration Department
PO Box 11723
1001 GS Amsterdam
The Netherlands
fax number: +31 (0)20 - 797 3822
e-mail: melden.en.registreren@afm.nl
36. Should the disclosure be made on a gross or net basis?
A holder of economic interests in a financial company may net its long and short positions in that
company. The disclosable position will be any net short position of 0.25% or above.
37. When disclosing the net short position, will the holder of that position be required to include
details of both short and long positions (if applicable) in order to provide a breakdown of the net

economic interest?
No. Only the aggregate net short position of 0.25% or above will need to be disclosed. There is no
requirement to disclose any individual short and long positions underlying the net position.
38. Does an aggregated net short position need to be broken down into its component parts for
the purposes of the disclosure (i.e. any positions in cash settled shares, CFDs, other derivative
instruments etc)?
No. Only the aggregate net short position requires disclosure.
39. What is the first deadline for announcing a net short position of 0.25% or above under the
new disclosure requirements?
The first disclosure deadline is Tuesday 7 October 2008 close of business. This disclosure should
relate to any net short position of 0.25% or above held at close of business on Monday 6 October
2008.
Please note that the obligation to disclose a net short position under the September 21, 2008 notice still
applies to positions held at close of business on Friday 3 October 2008.
40. How frequently are net short position disclosures required?
Subsequent to the first disclosure deadline of Tuesday 7 October 2008, a person must disclose any net
short position of 0.25% or above by end of business on the day following each day on which the
disclosable short position is held. The net short position disclosed should be that held at the end of the
previous day. A disclosure is required even if the size of the short position has not changed since the
previous disclosure.
41. If a person’s previously disclosed net short position falls below the 0.25% disclosure
threshold, is a further disclosure of this fact required?
Yes. If a person’s net short position falls below 0.25%, one last disclosure of that fact is required.
42. Where a person has a structure that includes more than one legal entity, at what level is a net
short position disclosure required?
A disclosure should be made at group level and needs to be specified at group level, provided that the
disclosure clearly states which position belongs to which entity. Each legal entity is allowed to
disclose on behalf of the group. All the positions within the group have to be aggregated.
Further questions
43. What if I have another question not covered by the FAQs or wish to make a comment about
the new rules?
We may publish additional FAQs or clarify existing ones as further questions arise.
For technical questions (only) in relation to the short selling provisions please call on + 31 (0)20 797
3777 or e-mail to marketsupervision@afm.nl
For technical questions (only) in relation to the disclosure of pre-existing short positions please call on
+ 31 (0)20 797 3717 or e-mail to melden.en.registreren@afm.nl.
For all other queries or comments in relation to the new rules, please write in to:
Netherlands Authority for the Financial Markets (AFM)
Financial Infrastructure Department
P.O. Box 11723
1001 GS AMSTERDAM
The Netherlands