FSA extends regime forcing disclosure of short positions

THE FINANCIAL Services Authority is proposing to extend the regime which requires the disclosure of short positions in financial stocks, it said yesterday.

The City watchdog said an extension of the disclosure requirement, due to expire on 30 June, would “help reduce the potential for abusive behaviour and disorderly markets” and also hinted at longer-term regulation of short selling.

The FSA currently requires disclosure if a firm raises a net short position above 0.25 per cent of a company’s stock, with further updates for every 0.1 per cent above that threshold.

Sally Dewar, managing director of wholesale and markets at the FSA, said: “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,” she added. The consultation period on the FSA proposals will close on 12 June.

Hedge funds have hit out at the disclosure regime, saying it is a costly waste of time that will not prevent another banking crisis.