Exciting changes might be on the horizon for short-sellers in the UK! The Financial Conduct Authority (FCA) is considering a big shake-up of the rules, moving towards keeping the identities of investors who bet on falling share prices anonymous. Currently, identities need to be disclosed, but that could soon change.
This proposal aims to align UK practices with those in the US, making it just a bit easier for short selling to contribute positively to the market by removing what some see as unnecessary barriers. The reporting threshold might also be increased to 0.2% from the current 0.1% of a company’s share capital.
The FCA believes these changes will support market growth by encouraging short selling, which can help with price formation, liquidity, and risk management. Despite the potential changes, the FCA assures that there will still be “sufficient visibility” to keep financial markets in check.
Earlier this year, the UK government asked regulators to cut down on red tape, and with the UK no longer adhering to EU rules on this matter, it might just be the perfect moment for a regulatory revamp. However, some concerns about reduced transparency making market manipulation easier have arisen.
Simon Walls from the FCA described these proposals as a step in becoming a “smarter regulator” and emphasised that the move is designed to streamline the process for capital market participants while maintaining necessary transparency.
The consultation period is open until December 16, and, if approved, the new rules could be in place by the latter half of 2026. Keep an eye on this space, as these changes could significantly impact market dynamics!