FCA HQ
The FCA has today published plans to simplify the short selling regime in the UK.
It has published a new consultation paper on short selling and is seeking views on it by December.
A short position is a bet that a company's stock price or other financial instrument will decline. Short selling activity in the UK includes shares, UK sovereign debt, and UK sovereign credit default swaps (CDS), the regulator said.
The FCA said short selling “can play an important role by supporting price formation, providing liquidity, and facilitating risk management.”
It said its proposals aim to support growth by removing unnecessary barriers which might inhibit or discourage short selling while retaining sufficient visibility and controls over short selling to manage any risks to support orderly and effective financial markets.
The proposals include:
- Aggregated net short position disclosures: a new model will combine, anonymise, and disclose, all the individual positions reported above the 0.2% reporting threshold.
- Position reporting: extend the deadline for firms submitting position reports by reducing the time required for the regulator to process and provide guidance on how firms determine the issued share capital of companies to calculate their positions.
- Market maker notifications: streamline and automate our systems for receiving position reporting and market maker exemption notifications to make submissions easier, quicker and less burdensome.
Simon Walls, executive director of markets at the FCA, said: “These proposed changes are another important milestone in our drive to become a smarter regulator and to support growth.
“Aggregated net short positions and simplified processes for reporting will enhance and streamline the short selling regime in the UK, reducing burdens for capital market participants while ensuring the market still gets the transparency it needs.”
It has asked for comments on its Consultation Paper by 16 December.
It said the consultation will be of interest to:
- Any persons conducting short selling activity.
- Market makers.
- Securities lenders.
- Companies with shares admitted to trading on UK trading venues.
- Law firms, consultants, and trade associations, with an interest in short selling activity.
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