On 5 January 2009 the UK Financial Services Authority (FSA) issued its proposals relating to its current restrictions on short selling stocks of UK financial sector companies:
- The FSA proposes that the ban on the short selling of stocks in UK financial sector companies will expire on 16 January (the measures were originally given a limited life and were due to expire on that date).
- The FSA proposes to extend its temporary disclosure regime for significant net short positions in the stocks of UK financial sector companies until 30 June 2009.
The FSA had introduced these short selling measures on 18 September 2008 because of concerns about the potential for market abuse and the potential destabilising effects on the market resulting from short selling.
Many had expected the FSA to extend the ban on shorting UK financial stocks, but the FSA has said that the special circumstances which led it to introduce these measures had now changed and so the ban will be allowed to expire. However, the FSA has noted that it will keep the position under review and may reintroduce the ban should this be warranted.
The FSA is proposing to make a slight relaxation to the disclosure regime for net short positions of stocks in UK financial sector companies (which, as noted above, will be extended until 30 June 2009). Currently a disclosure must be made if a net short position exceeds 0.25% of a relevant firm’s issued shared capital, with further disclosures required if there are any changes in the position. Under the FSA’s proposals further disclosures would only be required at incremental 0.1% bands (i.e. as a net short position reaches 0.35%, 0.45% etc).
The FSA's announcement regarding its proposals (which are subject to a brief consultation period) is at the link below: