Need for reasoned short selling regime say UK Hedge Fund Managers: results of IMS short selling survey

In a survey of senior managers at hedge fund firms in London commissioned by IMS Consulting (“IMS”), the UK’s largest independent asset management and securities regulatory consultancy, the industry has almost unanimously agreed that short selling per se is not a significant contributor to market instability.

Despite this marked starting point those surveyed indicated their understanding of the FSA’s interest and role in short selling practices, with two thirds of all respondents recognising the FSA’s legitimate role in improving policy and rule-making in this area. However, the industry’s answers to IMS’ survey demonstrate a surprisingly common view as to the way forward when the current short selling prohibitions run out.

While those surveyed believed that the UK should not generally have across-the-board prohibitions against short selling, nearly 40% of respondents recognised there may be limited and extraordinary circumstances in which temporary restrictions may be imposed. Nearly 50% stated that the FSA’s policy should only be to apply temporary prohibitions during such times.

The full press release on the findings of the survey can be found  here