BBA has responded to FSA’s discussion paper on short selling. It:  

  • does not agree with a blanket ban as short selling has a legitimate role as a financial tool. The problems arise when the tool is used wrongly;  
  • does not think any further measures are needed. In particular it does not think Europe has had a problem with naked short selling that would justify special measures;  
  • agrees a strong disclosure regime is enough to deal with rights issues problems and thinks FSA should put the disclosure rules in the DTR rather than MAR;  
  • agrees there should be no further constraints on underwriters than existing conflicts and contractual considerations;  
  • sees the need for emergency bans if necessary;  
  • agrees there is no need for additional circuit-breakers or uptick rules;  
  • would like a standardised European regime where regulatory responsibility for disclosure is with the ultimate holder of the position;  
  • comments on the best way to marry disclosure obligations with the cost and benefit of the requirement; and  
  • does not think there needs to be a specific restriction on CDS instruments. It thinks disclosure rules should catch any instruments that can create an absolute or synthetic short position or any economic interest in a basket or similar structure whose components are predominantly financial sector stocks.