UK FCA final rules on changes to the UK short selling regime

The UK Financial Conduct Authority (FCA) has published policy statement PS26/5, setting out its new rules and final statement of policy for the UK short selling regime. In addition, the FCA published an operational guide to provide more detailed information on the operational changes required and the timeframe for implementation. This follows the introduction of the Short Selling Regulations 2025 (SSR 2025) under the Financial Services and Markets Act 2023 and the October 2025 consultation on the draft rules. The FCA has created a new Short Selling Sourcebook within its Handbook, to consolidate existing requirements and to introduce targeted changes to reduce regulatory burdens and improve market efficiency. Following consultation feedback, the FCA's final rules make further changes in the following areas to provide additional clarity and enhance its proposals:

• Removing the requirement for market makers to notify each financial instrument they want to benefit from the market maker exemption. They will only be required to submit a single "activity based" notification which will enable them to use the exemption for market making activities in any financial instrument. Market makers must also submit an "annual attestation" to demonstrate their compliance with the conditions to use the exemption.
• Considering, as part of its forthcoming review of the disclosure guidance and transparency rules (DTRs), whether the existing disclosure framework in DTR 5 could be used or adapted to require issuers to publish issued share capital specifically for short selling purposes.
• Confirming that it will not introduce automated notification arrangements at the outset of the new regime. The FCA will continue to receive notifications via email from the start of the new regime on 13 July. However, it will consider alternative ways for market makers to more efficiently submit notifications and attestations in the future.
• Extending the implementation period from two months to three months from the date of the publication of these final rules. To allow adequate time to make any operational changes, the FCA will continue to implement the new regime in two phases. It has also changed the dates for each phase to occur on a Monday.

The new short selling rules will enter into force on 13 July, with phase 1 taking effect on this main commencement date. Phase 1 includes: the implementation of the new short selling rules and the final statement of policy; changes to the FCA's systems to facilitate the disclosure of new aggregate net short positions; and the reportable shares lists. Phase 2 will take effect on Monday 30 November. This includes an update to the FCA's system for position reporting to facilitate persons uploading and submitting multiple submissions in a single "bulk submission".

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