FSA Announces Short Selling Updates

Hi ... wasn't planning on writing anything today, but the FSA has just made an announcement regarding short selling. 

The existing short selling ban on UK financial stocks is due to expire on 16 January.  You may recall that a number of countries had similar restrictions that were scheduled to end on 31 December and many announced extensions just before Christmas. 

I have to admit I wasn't hopeful when it came to the FSA, but a little while ago they announced that the short selling ban itself will indeed cease at the end of next week.  At the same time though, the FSA did propose to extend the short position disclosure requirement until 30 June 2009.  Disclosure is required for positions of 0.25% of a firm's issued share capital and further disclosure will be required for 0.10% increases from the initial 0.25% (i.e. disclosure at 0.35%, 0.45% etc).  The FSA is consulting on today's proposals until 9 January, so if you have comments, HURRY!  The full consultation document can be found here. 

It's a better outcome than I expected, however, the FSA has reserved the right to reimpose the short selling ban without consultation at any time in the future.  These bans around the world have undermined confidence in the freedom of the markets, and traders will no doubt be hesitant to just jump back in for trades that have a medium term time horizon.

Not the worst news to start the year. 

P.S.  Don't forget the GSL half day summit next week, timed to coincide with the expiry of the short selling ban. For more details, click here.

Happy New FEAR!  What will 2009 hold for us?