Shearman & Sterling LLP | FinReg | COVID-19: UK Financial Conduct Authority Confirms No Short Selling Ban (Yet)
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  • COVID-19: UK Financial Conduct Authority Confirms No Short Selling Ban (Yet)

    The U.K. Financial Conduct Authority has published a statement confirming that, in the wake to the COVID-19 pandemic, it is working with regulators in the U.S., the EU and elsewhere to ensure that the financial markets can remain orderly and open. Noting the recent volatility in the financial markets, the FCA confirms that the U.K. has not imposed a short selling ban and neither has the U.S. or any other major financial market. The EU has however temporarily reduced the threshold for the reporting of short positions. Net short position holders are required to notify the relevant national regulator of any net short position of 0.1% of the issued share capital of a company and of each 0.1% above that threshold. This also applies to listed shares on UK markets.  It is not necessary to notify existing positions above the new lower threshold that were not previously notifiable, until new trading takes place.

    Where another EU member state regulator has imposed a short selling ban, for example, Italy and Greece, the FCA has followed those bans. The FCA is monitoring the markets closely.  However, it recognizes that the ability to take long and short positions is an important function in the market, providing benefits to investors as well as general liquidity.

    View the FCA's statement.

    You may like to see our client note: "Italy Bans Short Selling and Lowers Thresholds for Material Shareholdings".

    You may like to see our client note: "EU Regulatory Response to COVID-19: ESMA Introduces Lower Short Position Reporting Threshold".

    Details of other regulatory responses to COVID-19 are available at our COVID-19 Research Center.

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    TOPICS: COVID-19FundsSecurities