Short Selling Guide UK
In this article we take a look at the short selling guide UK rules around short selling, including public disclosure of net short positions.
Shorting is an investment strategy that involves an investor borrowing shares from a broker to sell them at market price with the intention of repurchasing them at a lower price and profiting from the difference. It’s a highly risky strategy and novice investors should avoid it at all costs.
Following the financial crisis, the UK’s Financial Services Authority (FSA) temporarily banned short selling in certain UK financial stocks and required disclosure of net short positions. This was intended to help stabilise volatile markets and release downward pressure on share prices, especially in banks.
Best Trading Platform for Forex in the UK
In July 2023 HM Treasury announced welcome reforms to the UK short selling regime as part of a wider programme of repealing and replacing retained EU law in the financial sector. AIMA responded to the FSA’s Call for Evidence, highlighting the healthy role short selling plays in the functioning of the markets and calling for a number of key changes.
The draft short selling regulations introduce a new system of ‘aggregated’ net short position disclosure, increases the supervisory notification threshold from 0.1% to 0.2% and replaces the existing ‘negative exemption list’ with a positive ‘in-scope’ list. In addition, the FSA has ruled out the need for a ‘tick rule’, concluding that direct constraints on short selling would be disproportionate and counterproductive to the important functions that the market serves.…