UK FCA consults on changes to the UK short selling regime

The UK Financial Conduct Authority (FCA) has published consultation paper CP25/29, alongside a press release, setting out proposed rules and guidance for the UK short selling regime. This follows the introduction of the Short Selling Regulations 2025 (SSR 2025) under the Financial Services and Markets Act 2023. The FCA proposes to establish a new Short Selling Sourcebook within its Handbook, aiming to consolidate existing requirements and introduce targeted changes to reduce regulatory burdens and improve market efficiency. This approach is informed by HM Treasury's 2023 response to its call for evidence.

Key proposals include:

• Extending the Net Short Position (NSP) notification deadline to 23:59 on the day after the trade (T+1) and providing guidance on calculating NSPs and determining issued share capital.
• Clarifying when NSPs must be calculated and how to report within corporate groups.
• Requiring short sellers to retain records of covering arrangements for a minimum of five years.
• Expanding the criteria to determine which shares should be subject to reporting and covering requirements under the new Reportable Shares List (RSL), as required by the SSR 2025.
• Changing the date on which the FCA updates the RSL from 1 January to 1 April to align with the EU Short Selling Regulation.
• Simplifying the notification process and reducing the lead time required for Market Maker Exemptions.
• Aggregating individual NSPs into anonymised Aggregate Net Short Positions (ANSPs) per company.
• Issuing guidance on how ANSPs are calculated, published, updated and corrected.

The FCA will amend the Handbook Glossary to reflect terminology introduced in the new Short Selling Sourcebook. Related updates will be made to the Supervision manual, Decision Procedure and Penalties manual, and Enforcement Guide. The FCA intends to retain its current approach to emergency powers and has included a draft Statement of Policy with the consultation. The deadline for comments on the consultation is 16 December, with implementation planned in two phases to allow for system updates and transitional arrangements. Final rules are expected to be published two months in advance of the main commencement day, along with a live draft copy of the RSL which firms can incorporate into their systems.

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