01/10/2009 Author: Suzie Neuwirth

FSA opposes short-selling restrictions

The Financial Services Authority (FSA) has issued an official Feedback Statement confirming its opposition to restricting short-selling, in favour of a more disclosure-led approach.

The watchdog of the UK’s financial services sector also said that it intends to make future changes to short selling at an international, rather than domestic, level but had no immediate plans to change its short-selling requirements.
 
Alexander Justham, FSA director of markets, said: “The consultation exercise has confirmed our support for enhanced disclosure requirements for significant short positions rather than any direct restrictions on short selling, other than on a temporary basis in exceptional market conditions. But we remain committed to securing agreement on as wide an international basis as possible and, in particular, to achieving a harmonised regime within Europe.”
 
The Feedback Statement outlines responses to the FSA’s February 2009 Discussion Paper on short-selling, which had proposed a disclosure requirement for the short-selling of all stocks, using an initial disclosure threshold of 0.5% of issued share capital. However, the current threshold remains at 0.25%.
 
In line with last week’s G20 talk and current discussions for more global regulations, the FSA has been working with the Committee of European Securities Regulators (CESR), which has issued proposals for a short-selling disclosure regime. The FSA will continue to work with CESR to develop an agreed European disclosure policy for short selling.