Under the Transparency Directive, ESMA defines the concept of Home Member State as a guide to help investors identify which country they may be required to file for a given issuer. Simply put, an issuer's Home Member State is the EEA country (and regulatory body) that governs the disclosure obligations for said issuer’s securities. For all of the major European shareholding rules, FundApps looks to the Home Member State and whether the security is traded on an EEA-regulated market. For details on how Home Member State is calculated, please see our Help Center article linked here.

For issuers incorporated in the EEA, the home member state will be the country where the issuer is incorporated. For non-EEA-incorporated issuers, the logic to determine which country an issuer should file under is more nuanced. Let's discuss the impacts of this!

For non-EEA incorporated issuers, FundApps refers to the information provided in the FIRDS database and the markets where the security is listed. The system accomplishes this by looking to the markets provided in the positions file, or markets associated with ISINs in the the FIRDS database.

How does FundApps know whether to look to the positions file or to the FIRDS database? Within FundApps, there is a global setting titled “IsUsingFIRDSMarkets”. If this setting is enabled, FundApps will leverage the FIRDS data and will ignore the markets provided in the positions file.

The European Short Selling Regulation, put forth by ESMA, provides transparency into short trading across issuers admitted to trading on a European trading venue. Some issuers that trade on a European trading venue are given an exemption to reporting, and ESMA publishes a list compiling each of the ISINs.

The ESMA exempt list can often omit certain ISINs of an issuer, especially in cases where issuers have multiple shares with different ISINs. This means issuers may be triggering short-selling European rules when they are supposed to be exempt. In these scenarios, we recommend clients contact ESMA directly.

You can find more information on the exempt list in our Help Center article linked here.

When looking at the regulations and rules put out by different jurisdictions, some will require positions to be reported at the individual portfolio level, at the top-most entity level, at all entities, or some combination, etc. In FundApps, we account for this via “aggregation levels”, which you can read more about in our Help Center article linked here. When calculating results, FundApps looks to the aggregation level to understand where positions need to be filed. If the aggregation level is Portfolio, FundApps will trigger a result at the portfolio level. If the aggregation level is Top Level Entity, FundApps will generate a result at the entity level.

Some jurisdictions are unclear about what “level” a filing should be made at. In these cases, FundApps elects to take a conservative stance and will often trigger filings at the All Entities and Portfolio level. In these scenarios, a result would be triggered at every portfolio and entity. Clients may have to evaluate at which level they should file, considering the circumstances.