Arrowstreet Capital fined for incorrect notifications of short positions
Executive Summary
AFM has imposed an administrative fine of €297,000 on Arrowstreet Capital, LP for **systematic underreporting and underdisclosure of net short positions** in two Euronext Amsterdam issuers between July 2020 and November 2024, caused by an error in its short position calculation methodology. The case underscores that AFM expects robust calculation, control and reporting frameworks around short selling, and that repeated methodology errors leading to incorrect notifications and public disclosures will be treated as serious violations of the EU short selling and Dutch transparency regimes, even where firms later cooperate.
What Changed
- - AFM has reaffirmed strict enforcement of notification and disclosure obligations for net short positions in shares admitted to trading on Euronext Amsterdam, including the expectation of accurate calculation methodologies and control frameworks.
- The case confirms AFM’s interpretation that systematic underreporting (wrong figures in 101 notifications) and underdisclosure to the public (wrong figures in 85 cases) constitutes a material breach of both regulatory reporting obligations to AFM and
- AFM emphasises that net short positions must be notified promptly and accurately, and that disclosures above the public threshold are a key tool for market participants to understand negative expectations and potential market abuse or distortion risk
- AFM demonstrates that self‑reporting, prompt correction, full cooperation and remediation can result in a reduced fine and simplified settlement, signalling a clear incentive structure for firms to proactively address discovered short‑selling reporti
- The publication reinforces that AFM will use the short selling register and underlying notifications to monitor for market abuse, market distortion and systemic risks, increasing scrutiny on firms with complex or high‑volume short‑selling strategies.
- The case indirectly highlights the need to align internal methodologies with EU short selling Regulation (EU) No 236/2012 and Dutch rules on substantial holdings and short positions, especially regarding thresholds, aggregation and timing of notifica
Suggested Considerations
- Review and document the firm’s methodology for calculating net short positions in EU‑listed shares, ensuring alignment with the EU Short Selling Regulation and AFM’s thresholds and definitions, including aggregation rules and treatment of derivatives.
- Perform a comprehensive back‑testing and reconciliation of historical and current net short position calculations against trade data, positions and corporate actions to identify any systemic discrepancies or underreporting risks.
- Implement or enhance controls that validate short position calculations prior to submission, including independent second‑line checks, exception reporting, and automated variance checks for large movements or threshold breaches.
- Map all AFM short selling notification and disclosure thresholds and timing requirements into the firm’s surveillance and reporting systems, ensuring automated alerts when positions reach, exceed or fall below relevant levels.
- Establish robust governance over short selling reporting, including clear ownership between trading, operations, risk and compliance, formal sign‑off procedures, and regular reporting to senior management on short‑selling compliance.
- Introduce periodic internal audits or assurance reviews focused specifically on short position notification and disclosure processes, including data lineage, system logic, and interfaces with AFM’s electronic reporting channels.
Key Dates
Compliance Impact
Non‑compliance with AFM short selling notification and disclosure obligations can result in significant administrative fines, reputational damage, and heightened supervisory scrutiny, particularly where errors are systemic or affect numerous notifications. AFM’s willingness to reduce the fine in this case was contingent on proactive self‑reporting and remediation, but the underlying violations sti
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original AFM source before acting. Full disclaimer.
Summary
On 20 April 2026, the Dutch Authority for the Financial Markets (AFM) imposed an administrative fine of €297,000 on Arrowstreet Capital, Limited Partnership for the systematically incorrect notifications of its net short positions in two companies listed on Euronext Amsterdam. Arrowstreet thus violated the rules on short selling between July 2020 and November 2024.