The UK Financial Services Authority (FSA) will continue to monitor short equity positions until June 30 this year, under proposals released this week.
The FSA said it would lift its ban on the short selling of financial stocks on January 16, as originally planned, but would continue to require holders of "significant" short positions to report them until June 30. Positions of more than 0.25% of issued equity are counted as significant; holders would also have to report changes of more than 0.1% in their short positions.
The short selling ban, introduced in September 2008, had been successful in preventing short selling, at the cost of reduced liquidity and wider bid-offer spreads, the FSA said - but "in current market conditions short selling...is no longer in itself to be regarded as abusive".
Some other countries' bans have already expired - a US ban introduced in September expired on October 8 - but both France and Germany have extended their bans. The AMF, the French financial market regulator, said on December 19 it would prolong its ban on shorting financial stocks, due to expire that day, until February 2009; the German regulator BaFin also extended its ban on naked short selling of 11 financial stocks to March 31 2009, rather than letting it expire on December 31.
The International Organisation of Securities Commissions said on November 26 that it would set up a group to coordinate restrictions on short selling, to be led by the Hong Kong Securities and Futures Commission and set to report next month.
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