EU Short Selling Regulation (SSR) Aggregation

This article discusses the aggregation requirements of the EU Short Selling Regulation (EU SSR) and how this is reflected within FundApps SD.


  • Background
  • SSR Management Aggregation
  • SSR Non-Management Aggregation


The EU SSR is represented in FundApps by rules which have “SSR” in the name of the RuleCode or the Rule Label (see a rule's General tab for this information). It is important to evaluate your firm’s relationship to any short positions held - in particular, whether you are simply holding short positions or also acting as discretionary manager for them.

SSR Management Aggregation

The EU SSR applies to the legal entity holding a net short position in the relevant securities, regardless of where it is located. However, one must carefully consider who holds the discretionary management authority over short sold assets, particularly if the entity is acting as a Discretionary Manager for 3rd parties (a person or entity which has contracted to make investment 'buy/sell' decisions for another party 'client, fund, etc'. This is often contractually formalised in an “investment management agreement” 'IMA'. In such cases, formal legal ownership of assets usually rests with a custodian/nominee, the underlying client or beneficial owners of the assets).

In FundApps, one should model a firm’s corporate structure in relation to where it holds discretionary management authority (power to buy/sell securities) in the Management aggregation tree. In most cases, the Management aggregation tree suffices for purposes of the EU Short Selling Regulation.  However, there are certain exceptions to consider, for which we are able to set up the SSRManagement tree to capture the requirements for the EU SSR regime.

What justifies a separate management-type aggregation tree for the EU SSR?

  1. Article 12 of the SSR Delegated Regulation (COMMISSION DELEGATED REGULATION (EU) No 918/2012) sheds light on how entities involved with investment management activities are to consider their short position (including the calculation and netting of positions).
  2. This article defines “management entity” as “a legal person or entity, including a division, unit or department that manages, on a discretionary basis, funds or portfolios pursuant to a mandate.” This generally excludes entities which hold discretionary management authority purely due to them being Legal Owner (assuming they haven’t delegated management authority).
  3. There are cases, where a given “division” or branch of a company might be considered a “management entity” given the above definition, but not generally considered a legal entity with management discretion over assets.
  4. In addition, Article 12 also notes that one should exclude from this aggregation tree any “funds and portfolios the management of which it has delegated to a third party” (more on this below).
  5. In such cases, a client may need to exclude some management entities or include additional entities (for example, branches that manage discretionary portfolios) under this SSR specific definition which are not considered generally as legal entities for other purposes.

When do I need to set up the SSR-specific aggregation tree: SSRManagement?

  • Only in the following cases:
    • If you have branches or divisions in your corporate tree which meet the requirements outlined in 3 above (or other such discrepancies).
    • If your firm is a Discretionary Manager of assets for 3rd parties and a Legal Owner of other assets, you will need the SSRManagement tree set up to cover only the discretionary managed assets.
  • In summary, an SSRManagement tree should only include Portfolios and Entities where the entities are Discretionary Managers (and the associated parent entities/controllers).

Note that if you do not set up SSRManagement, the Management tree will be marked as the SSRManagement tree. So the EU SSR rules will run on your general “Management” aggregation tree. 

SSR Non-Management Aggregation

If you are engaged in short selling, it’s important to also analyse your corporate tree in regard to another dimension: where an entity holds short sold assets for any other reason (e.g. prop trading) aside from being  a Discretionary Manager. In our experience, this does not generally include assets where discretionary management authority has been delegated to a 3rd party. 

The EU SSR requires reporting for such assets in a different way from those of a Discretionary Manager. The rules which apply to your firm, in this case, are separate from the “standard” SSR rules as they require a different netting method.

If this applies to your firm, please discuss this with our Support team so we can help you do the following:

  1. Set-up a “Non-Management” aggregation tree
  2. Ensure that a separate set of SSR rules (Non-Management rules) is applied as these rules use a different netting methodology. This includes ensuring that the value “Non-Management” is included as a “Folder” for all portfolios in the tree.

What are some examples of where you hold assets described by “Non-management”?

  • Where you hold short sold proprietary assets
  • Where you hold short sold positions that you legally own and over which you have discretionary management authority

This can be complicated so...

If you have any further questions or you are unsure about how to apply this analysis to your firm, please don’t hesitate to discuss it with our Client Services team.


References for further information:

  1. Article 12 of the SSR Delegated Regulation (COMMISSION DELEGATED REGULATION (EU) No 918/2012)
  2. aosphere’s Rulefinder report the EU Member States


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