RE: Fighting back10 Feb 2024 16:06
Mangrove will now have to report all the way down to 0.2% under the new rules
The new UK initial reporting threshold of 0.2 percent will apply from Feb. 5, 2024. From that date, position holders with net short positions below 0.2 percent will no longer be required to disclose their positions. The incremental reporting threshold of 0.1 percent for any net short positions above 0.2 percent will continue to apply.
Under the EU Short Selling Regulation[ii], the initial threshold of 0.1 percent continues to apply to net short positions in the share capital of issuers with shares admitted to trading in EU member states.
Other Anticipated Reforms
The UK HM Treasury has recently published the draft Short Selling Regulations 2024[iii] (“Draft 2024 Regulations”) and its response to the consultation on further amendments to the UK short selling regime (“Consultation Response”).[iv] The following key reforms of the UK short selling regime are expected in the near term:
Aggregated publication of net short positions: At present, the FCA publishes the names of position holders with net short positions of 0.5 percent or more. Under the Draft 2024 Regulations, the FCA will instead publish the aggregate net short positions for each issuer (expressed as a percentage of the company’s share capital) based on the notifications it receives in respect of each business day. Individual positions and the names of position holders will no longer be disclosed publicly.
New powers granted to the FCA: The Draft 2024 Regulations are expected to grant the FCA rulemaking, supervisory and enforcement powers regarding short selling. As a result, the FCA will have more flexibility to make future modifications to the UK short selling regime without the need to involve the legislative process. Among other things, the FCA will have powers to make rules to exempt shares from the scope of the short selling reporting obligations. The expectation is that the FCA will, in the future, publish a “positive” list of all in-scope shares, rather than continuing with the present practice of a “negative” list of exempted shares.
Net short positions in UK sovereign debt and CDS: The Consultation Response confirms the UK Government’s plans to remove the current obligations on short sellers to obtain “cover” for short positions in UK sovereign debt and report net short positions of 0.5 percent or more of UK debt to the FCA. Even more significantly, the Government intends to repeal the current restrictions on buying “uncovered” sovereign CDS. Sovereign debt and sovereign credit default swaps will remain in scope of the FCA’s emergency intervention powers for short selling.
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