Watchdog scraps EU-era rule in bid to boost London’s market competitiveness
The UK’s financial watchdog is to stop naming investors who bet against listed companies, marking a major break from European transparency rules in an effort to make London’s markets more attractive to global funds.
Under new proposals from the Financial Conduct Authority (FCA), short sellers will no longer have their identities disclosed publicly when they take significant positions against a company’s shares.
Instead, the regulator will publish only the total size of short positions on an anonymised, aggregate basis system similar to that used in the United States.
FCA drive to be a smarter regulator
The change, first reported by the Financial Times, follows the government’s wider push to streamline post-Brexit financial regulation. Short sellers will still need to notify the FCA privately when their position exceeds 0.2 per cent of a company’s share capital, but that threshold, raised from 0.1 per cent earlier this year, and extended reporting deadlines mean lighter oversight.
“These proposed changes are another important milestone in our drive to become a smarter regulator and to support growth,” said Simon Walls, the FCA’s executive director of markets.
He said the reforms would “reduce burdens for capital market participants while ensuring the market still gets the transparency it needs.”
What does the industry say?
Supporters argue the move will enhance London’s competitiveness as a financial hub.
“Smart reforms will attract investment and support economic growth,” said Rob Hailey of the Managed Funds Association, which represents hedge funds.
But critics warn the shift risks fuelling market abuse.
“It beggars belief that policymakers would water down the supervisory regime for short selling further,” said Simon Youel of campaign group Positive Money.
“In practice it is too often abused by hedge funds to juice returns at the expense of market stability.”
Investor advocates in the US also questioned the benefits. Dennis Kelleher of Better Markets said increased short activity “often leads to bubble growth, not economic growth.”
The FCA will host a consultation event with the new rules expected to take effect after the consultation closes on December 16.
