1. A natural or legal person may enter into a short sale of sovereign debt only where one of the following conditions is fulfilled:

(a) the natural or legal person has borrowed the sovereign debt or has made alternative provisions resulting in a similar legal effect;

(b) the natural or legal person has entered into an agreement to borrow the sovereign debt or has another absolutely enforceable claim under contract or property law to be transferred ownership of a corresponding number of securities of the same class so that settlement can be effected when it is due;

(c) the natural or legal person has an arrangement with a third party under which that third party has confirmed that the sovereign debt has been located or otherwise has a reasonable expectation that settlement can be effected when it is due.

2. The restrictions in paragraph 1 do not apply if the transaction serves to hedge a long position in debt instruments of an issuer, the pricing of which has a high correlation with the pricing of the given sovereign debt.

3. Where the liquidity of sovereign debt falls below the threshold determined in accordance with the methodology referred to in Commission Delegated Regulation (EU) No 918/2012 or in regulations made by the Treasury under paragraph 4, the restrictions referred to in paragraph 1 may be temporarily suspended by the FCA.