FSA Extends Short Selling Disclosure Regime

As expected the FSA has extended the existing short selling disclosure regime which was due to expire on 30 June. This was explained by IMS on 1 June 2009 (see below). The FSA has confirmed the regime will continue in its current form.

STOP PRESS - FSA Proposes to Extend Short Selling Disclosure Regime 1 June 2009

The FSA has today proposed to continue the existing Short Selling Disclosure Regime beyond the 30 June date originally set for it to end.

Followers of the short selling saga (click here to follow the events) will recall that in January the FSA allowed short selling of financial services stocks to resume and introduced a disclosure regime which meant regulated firms had to disclose short positions of 0.25% (or more) of the issued share capital of the company. Firms also had to disclose when the holding increased or decreased through further incremental thresholds of 0.1%. The FSA had proposed this as a temporary measure while they sought the “widest possible international consensus” for a permanent regime.

It appears clear, though it remains unsaid, that the FSA has not yet been able to achieve this consensus. While the FSA has said that it proposes to provide further feedback and policy proposals in the third quarter of 2009, it has acknowledged that setting a firm date for ceasing the current temporary arrangements would be artificial. The FSA has added however that it still expects the proposals to be superseded by broader permanent disclosure measures, preferably agreed on the widest possible international basis, and/or be revoked.

This means no change for firms at the moment, and given the amount of change firms have had to cope with in this area it is probably the most sensible approach. The proposals are just that at the moment as there is a short consultation period ending on 12 June. However, as the proposals bring in no additional measures, it seems unlikely the proposals will be amended.

30 June 2009