Today, the Financial Services Authority (FSA) announced that it has no plans to renew its ban on short selling of UK financial sector company stocks, but is prepared to reintroduce the ban without consultation if necessary. The ban, which was announced in September and reviewed in October, is scheduled to expire on January 16, 2009.
Although the FSA is allowing the short selling ban to expire, it is “proposing to extend its temporary disclosure regime for significant net short positions in the stocks of UK financial sector companies” until June 30, 2009, in order to “reduce the potential for abusive behavior and disorderly markets.” The FSA has announced one change to the disclosure regime:
- 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 0.1% bands (e.g. as a net short position reached 0.35%, 0.45% and so on). The scope of the disclosure obligations continues to apply only to stocks in UK financial sector companies.
The FSA has released a more detailed consultation paper on temporary short selling measures. The FSA intends to publish a separate consultation paper within a month setting out its proposals for the longer-term short selling regime.