On 6th February 2009, the UK’s Financial Services Authority (FSA) published a discussion paper inviting market participants to contribute to the development of a long term short-selling regime in the UK.1

As we reported in our previous client alerts, in response to the global banking crisis and exceptional price volatility in UK bank shares, FSA has introduced, over the past eight months, two parallel sets of emergency rules to restrict short-selling in UK-listed companies:

1. On 13th June 2008, FSA introduced new rules requiring disclosures of short positions in UK-listed companies (financial sector or otherwise) undertaking rights issues where they reach or exceed 0.25% of the issued share capital of the relevant company;2 and

2. On 18th September 2008, FSA introduced further rules relating to UK-listed financial sector companies, consisting of (i) a temporary ban on any short-selling of such stocks and (ii) obligations to disclose short positions reaching or exceeding 0.25% of the issued share capital of the relevant company as well as subsequent changes to such position.3

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