The UK government is moving ahead with plans to reform short selling rules that will see the removal of a requirement for hedge funds and other investors to disclose their short positions publicly, reports Pensions & Investments. The new Labour government laid out draft regulations before the UK Parliament on Nov. 11, publishing its draft Short Selling Regulations 2024.
The public disclosure regime will be replaced with an anonymized, aggregated net-short position disclosure regime — meaning total net-short positions of 0.5% or above of company shares will be made public to the market by the FCA, rather than individual positions. The changes were unveiled by the previous Conservative government in July 2023. The 0.2% private reporting threshold was changed from 0.1% in February.
“The current requirement for individual investment managers to disclose their short positions publicly has long acted as a barrier to greater trading activity in the U.K. given how it opened the door to copycat trading by a firm’s competitors,” said Jack Inglis, CEO of the Alternative Investment Management Association, in an emailed statement to Pensions & Investment. “We believe that replacing the ill-conceived requirement with aggregated information on short positions at issuer level will increase trading activity on U.K. equities markets to benefit investors and the wider U.K. economy.”