In the UK, the Financial Services Act 2010 (“FS Act”)1 received Royal Assent on 8th April 2010, and will come into force on 8th June 2010.

The FS Act grants the UK Financial Services Authority (the “FSA”) enhanced powers to regulate short selling; these are inserted as a new Part 8A into the Financial Services and Markets Act 2000 (“FSMA 2000”), either by prohibiting it or by requiring disclosure of information.

At present, the FSA’s short selling rules are contained in the Code of Market Conduct (“MAR”)2 implementing the market abuse provisions under Section 118(8)(a) of FSMA 2000. The FSA intends to use its new powers under the FS Act to replace the existing rules with a new FSA Handbook module: the Financial Stability and Market Confidence sourcebook (“FINMAR”).