UK scraps public disclosure of short selling

LONDON: The UK government said on Tuesday it would no longer require short sellers to publicly disclose their trades on UK companies.

A short position is a bet that a company’s stock price will decline. Under the rule change funds will no longer have to tell the public their individual net short positions on a stock.

While short sellers will still have to report their positions to the regulator, the Financial Conduct Authority (FCA), the threshold at which positions have to be disclosed would increase.

Currently, funds must tell the FCA when they have borrowed 0.1% of a company’s outstanding stock in order to short it. Now, that threshold will increase to 0.2% of the stock.

The decision is part of an effort to repeal European Union regulation post Brexit and comes as the government reworks its Financial Services and Markets Act.

The rule change will be implemented by the FCA.

Critics say short sellers hurt companies and exacerbate market volatility, but short sellers and advocates say they act as an important check on public firms.

Jillien Flores, head of global government affairs at the Managed Funds Association, a hedge fund lobby group, said Tuesday’s changes should strengthen the UK’s competitiveness.

She said the move would “unleash the benefits of short selling, including enhancing market liquidity, promoting price discovery, and exposing corporate fraud.” Reuters

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