Regulator aims to make short-selling easier in the UK

The Financial Conduct Authority (FCA) is asking for feedback on proposals for a new short-selling regime.

Short selling is a trading strategy where an investor borrows a security, sells it, and then buys it back later at a lower price to return it to the lender. The investor profits from the difference between the higher selling price and the lower repurchase price, minus any fees.

Short selling can play an important role by supporting price formation, providing liquidity, and facilitating risk management. The strategy is also often used to speculate on a decline in an asset’s value.

The FCA said that its consultation aims to support growth by removing unnecessary barriers that might inhibit or discourage short selling while retaining sufficient visibility and controls over short selling to manage any risks to support orderly and effective financial markets.

Together with the government’s legislative framework set out in January 2025, the proposals include:

Aggregated net short position disclosures: A new model will combine, anonymise, and disclose all the individual positions reported above the 0.2% reporting threshold.
Position reporting: Extend the deadline for firms submitting position reports by reducing the time required for the regulator to process and provide guidance on how firms determine the issued share capital of companies to calculate their positions.
Market maker notifications: Streamline and automate our systems for receiving position reporting and market maker exemption notifications to make submissions easier, quicker, and less burdensome.

“These proposed changes are another important milestone in our drive to become a smarter regulator and to support growth,” said Simon Walls, Executive Director of Markets at the FCA.

“Aggregated net short positions and simplified processes for reporting will enhance and streamline the short-selling regime in the UK, reducing burdens for capital market participants while ensuring the market still gets the transparency it needs,” he said.