FSA to extend disclosure of “short” positions in banks
by Gill Montia
The Financial Services Authority (FSA) is proposing to extend current requirements for traders to disclose short positions in the stocks of certain UK financial companies.
A ban on short selling of stocks in 32 financial institutions was introduced by the regulator in September of last year, after short selling was blamed for a catastrophic downward spiral in the share price of HBOS.
The ban was lifted in mid-January but the FSA retained rules that demand the disclosure of significant “short” positions, until 30th June.
According to the FSA, “extending the regime will continue to help reduce the potential for abusive behaviour and disorderly markets”.
The regulator adds that in the long term it intends to replace the requirements with “a broader short selling regime for all UK stocks”.
The FSA’s managing director of wholesale and markets, Sally Dewar, says: “Keeping the disclosure requirements will continue to enhance transparency and limit the potential for market abuse, while details of a long term regime for short selling are being drawn up. We remain committed to achieving an international consensus that is as wide as possible on our broader short selling regime.”
The consultation period on the proposed extension will close on 12th June to enable any new measures to be put in place before the current regime expires.