On 14 January 2009, the FSA confirmed that with effect from 16 January 2009 it would allow the ban on short selling to lapse whilst at the same time extending the disclosure obligations in relation to significant short positions. The FSA's confirmation follows the consultation paper called "Temporary short selling measures" which it published on 5 January 2009.
The following proposals, announced on 14 January, have now been implemented:
- the lapse of the temporary ban on creating or increasing a net short position in a UK financial sector company;
- the extension of the obligation to disclose net short positions of 0.25% of a relevant company's issued capital to 30 June 2009; and
- the amendment of the disclosure obligation, so that only changes of 0.1% or more in a net short position (upwards or downwards) will require disclosure. This is structured by way of disclosure bands every 0.1% above the 0.25% threshold (i.e. at 0.35%, 0.45%, 0.55% etc). In addition, if a net short position decreases below 0.25% that should also be disclosed.
In implementing these changes, the FSA emphasised that it would keep the position under review and that it is ready to reintroduce a ban without consultation if necessary.
As before, the relevant changes have been implemented by amendments to the FSA's Code of Market Conduct (MAR) and FSA Handbook Glossary.
There will now be a further FSA consultation paper on the longer-term options for a short selling regime.
View FSA Policy Statement 09/1 on Temporary short selling measures (18 page pdf) (includes Short Selling (No 5) Instrument 2009 amending the Code of Market Conduct and Handbook Glossary).