The U.K.’s Financial Conduct Authority (FCA) is issuing final rules and guidance as it implements a lighter-touch approach to overseeing short-selling activity — a move that aims to facilitate short selling by curbing needless administrative burdens.
In a policy statement Thursday, the regulator issued a final edition of new rules on short selling, set out its approach to intervening to restrict or prohibit short selling in exceptional cases, and provided guidance detailing how the new rules will be implemented (with phase one in July and phase two in November).
The new regime is being developed as part of a broader effort to replace requirements that prevailed under European Union law, and aims to “alleviate disproportionate burdens on firms that inhibit or discourage short selling and its associated benefits,” the FCA said.
To that end, the reforms aim to “create a more efficient, effective, and coherent short-selling regime to maintain the orderly and effective functioning of U.K. markets, while removing disproportionate costs.”
Among other things, the new regime will give firms more time to compile and submit short position reports, and it streamlines the reporting process for market makers. The FCA said these changes will reduce firms’ administrative demands.
At the same time, the regulator indicated that it’ll scale back its compliance demands, providing oversight in “a more proportionate and practical way.”
Additionally, starting in mid-July, the FCA will begin publishing aggregated data on overall net short positions above a 0.2% threshold, without identifying individual short sellers.
“These changes give firms clearer rules and cut administrative burdens, while ensuring we have the information we need to keep the market fair. It is smarter regulation in action,” said Jon Relleen, director of infrastructure and exchanges at the FCA, in a release.