The End of the Short Selling Ban
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Trading Features / Strategies from Financial Spreads.
It could be a big day in the markets, the FSA have lifted their short selling ban.
Was it worthwhile? Perhaps, perhaps not. Either way most financial stocks are now worth 50% less than when the ban came in to force. With such falls it was difficult to argue to keep the ban in place.
As Financial Spreads have told their customers “We are pleased to inform you that the Financial Services Authority (FSA) will lift the ban on short selling UK financial stocks on 16th January 2009. This means that from 16th January 2009 you will once again be able to sell these shares on our spread betting platform.”
Friday Trading
According to the FSA website, “The FSA will allow the ban on short selling stocks in UK financial sector companies to lapse on Friday. These changes will take effect at 00:00:01 on 16 January 2009, permitting short selling of these stocks on Friday”
“[The FSA] has today confirmed that it will extend its disclosure obligation for short selling of stocks in UK financial sector companies until 30 June 2009. The decision follows strong support for the proposals on which the FSA consulted last week.
“The FSA plans to issue a further consultation paper with proposals on longer-term options for a short selling regime within a few weeks”.
Important Disclosure Obligations
The FSA will be extending the disclosure obligations for short selling of stocks in UK Financial sector companies until 30th June 2009. For more information about disclosure obligations please visit the FSA website.
Disclosure of a net short position in the stock of a UK financial sector company will continue to be required once a position reaches 0.25% of a relevant firm’s issued share capital. However, from 16 January 2009, further disclosure will only be required if a short position changes by a further 0.1% of issued share capital (i.e. at 0.35%, 0.45% etc).
Non UK Financial Stocks
It is important to note that other regulators outside of the UK may still have their shorting ban imposed and it is your responsibility to know which shares you can and cannot short.
Please remember that this ban may be reinstated in the future and whilst we will attempt to keep you informed of any changes to trading regulations, we cannot be relied upon to keep you informed and we are not liable for any regulatory actions taken.
The above comments do not constitute investment advice and neither Financial Spreads nor Clean Financial accept any responsibility for any use that may be made of them.
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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
Article provided / approved by Financial Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.
'The End of the Short Selling Ban' edited by DB, updated 18-Jan-09
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