WIREDGOV

The Financial Services Authority (FSA) yesterday proposed to extend the current disclosure regime for significant net short positions in the stocks of UK financial sector companies, due to expire on 30 June 2009.

Extending the regime will continue to help reduce the potential for abusive behaviour and disorderly markets. The FSA expects that, in the longer term, the requirements will be replaced by a broader short selling regime for all UK stocks.

As is the case at present, disclosures will only need to be made if a net short position exceeds 0.25% of a company’s issued shared capital or increases by 0.1% bands above that (e.g. net short position reaches 0.35%. 0.45% and so on).

Sally Dewar, managing director of wholesale and markets at the FSA, said:

"Keeping the disclosure requirements will continue to enhance transparency and limit the potential for market abuse, while details of a long term regime for short selling are being drawn up. We remain committed to achieving an international consensus that is as wide as possible on our broader short selling regime."

The consultation period on the FSA proposals will close on 12 June to enable any new measures to be put in place before the current regime expires.

Notes for editors

1. Full consultation paper CP09/15 - Extension of the short selling disclosure obligation - can be found on the FSA website
2. A short selling disclosure requirement was first introduced on 18 September 2008 and extended in an amended form on 16 January 2009 (see press release 009/2009).
3. In February, the FSA published a discussion paper examining longer-term options for the short selling regime in the UK (see press release 023/2009). The FSA plans to issue a feedback statement in Q3 2009 setting out its conclusions.  
4. The list of firms covered by the provisions can be found on the FSA website.
5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.