The Financial Services Authority is introducing new provisions to the Code of Market Conduct to prohibit the active creation or increase of net short positions in publicly quoted financial companies. These provisions come into effect from midnight tonight.

The detailed changes to the Code of Market Conduct, and a schedule of the companies whose securities are covered by them, are not yet available, but will be published before the market opens tomorrow, Friday 19 September.

From Tuesday 23 September, the FSA will require daily disclosure of all net short positions in excess of 0.25 per cent of the ordinary share capital of the relevant companies held at market close on the previous working day. Disclosure of such positions held at close on Friday 19 September will also be required on Tuesday 23 September.

These provisions are to remain in force until 16 January 2009, although they will be reviewed after 30 days. The FSA has said it is prepared to extend this approach to other sectors if it judges it to be necessary.

The FSA intends to publish a comprehensive review of the rules on short selling in January 2009.