AIMA’s UK short selling wins

Published: 30 January 2024

On Monday 5 February, an increase of the notification threshold for net short position reporting to the UK’s Financial Conduct Authority will come into force. The change, from 0.1% of issued share capital to 0.2%, marks one of a number of significant wins for AIMA and the industry in the context of the UK’s Short Selling Regulation Review.

The Review, launched by HM Treasury in 2022, explored how the UK should reform the regulation of short selling as part of the Government’s programme to repeal and replaced retained EU law in financial services. AIMA responded to the Call for Evidence highlighting the healthy role that short selling plays in the proper functioning of financial markets. We called, in particular, for a removal of the public disclosure requirement, improvements to the supervisory notification requirements and for a replacement of the existing ‘Exempt List’ of shares subject to short selling disclosures with an in-scope list of shares.

Through strong and sustained advocacy, from direct meetings with HM Treasury and the Financial Conduct Authority to highlight the need for such reforms to collating data to assist HM Treasury’s regulatory impact assessment of the costs and benefits of the measures, AIMA succeeded in securing support for our members’ three key, and other, proposed changes. In July 2023, HM Treasury announced welcome amendments to the UK Short Selling Regulation, including replacing the public disclosure regime with an aggregated net short position disclosure regime, increasing the supervisory notification threshold from 0.1% to 0.2% and requiring the FCA to publish a ‘positive’ list of in-scope shares to which certain rules apply.

Following entry into force of the changes to the supervisory notification threshold on Monday 5 February, the wider reforms to the UK short selling regime will be implemented through The Short Selling Regulations 2024, which is due to be laid before Parliament this year.

AIMA will continue to play a central role this year as the FCA consults on the details of the rules, including the nature of the amended reporting requirements and the criteria for a list of reportable shares.

If you would like to participate in AIMA’s short selling advocacy or have any questions, please contact Adam Jacobs-Dean – Managing Director and Global Head of Markets, Governance and Innovation ([email protected]).