UK Government to reform short selling.9 Dec 2022 10:04
UK Treasury to reform short selling regulation
The UK is to reform the regulations on the short selling of shares listed on UK market – the practice of borrowing shares to sell them, with the goal of buying them back cheaper in future.
The current regulations were introduced by the EU (and put onto the UK statute book after Brexit), and include a ban on ‘naked short selling’ – selling short shares without borrowing them first.
Naked short selling is controversial, as speculators could use it to drive down a company’s share price. But advocates argue it helps with ‘price discovery’ – showing if a company is overvalued.
The Treasury says the government will repeal the current regulation and replace it with “a regulatory regime tailored to UK markets, supporting market integrity and bolstering the competitiveness of UK financial markets”.
It is launching a Call for Evidence, seeking views on how to reform the regulation of the practice of short selling, as it repeals and replaces retained EU law in financial services. This consultation closes on the end of 4 March next year (detail are here).