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FSA short selling regime: lapse of short selling ban for stocks in UK financial sector companies, 6 month extension to disclosure regime.
The Financial Services Authority (FSA) has announced that the ban on short selling stocks in UK financial sector companies will be allowed to lapse with the effect that short selling in these stocks will be permissible from 00:00:01 on Friday, 16th January 2009.
Simultaneously, the FSA announced an extension to the disclosure obligation for short selling of stocks in UK financial sector companies until 30 June 2009. Originally, this measure had a temporary duration. Disclosure of a net short position in the stock of a UK financial sector company will continue to be required once a position reaches 0.25% of a relevant firm’s issued share capital. However, in a change from the regime, from 00:00:01 on Friday, 16 January 2009, further disclosure will only be required if a short position changes by a further 0.1% of issued share capital (i.e. through thresholds of 0.35%, 0.45% etc). Firms will need to adjust their procedures as necessary from tomorrow in order to file any disclosures due on Monday, 19th January 2009.
Both decisions were proposed by the FSA in a consultation paper issued last Monday, 5th January 2009. The FSA describes itself as having received strong support for each proposal.
The FSA will issue a further consultation paper with proposals on longer-term options for a short selling regime within a few weeks. One of the key issues to be keenly debated in the course of that process will be whether public disclosure of short selling information is absolutely necessary to secure an orderly market as compared with, say, single aggregated net short-position information for each stock on a periodic, but sufficiently delayed basis.
Click here to read the FSA’s announcement in full.
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January 2009
