Rarely does FT Alphaville draw attention back to previous posts so barefacedly, but in honour of the below, we encourage readers to revisit, What is your assessment as to the typical volume of spam received from the FSA per day - a post we really rather enjoyed writing way back in July. Anyway, this statement from the FSA today:
FSA proposes enhanced transparency requirements on short selling for all stocks
In a discussion paper (DP) issued today, the Financial Services Authority (FSA) has proposed a general short selling disclosure requirement for all UK listed stocks. The proposals follow a comprehensive review of short selling undertaken since the FSA introduced its temporary ban in September 2008.
The DP looks at the arguments for and against short selling, examines possible regulatory constraints on short selling and then examines options for enhanced transparency. The paper poses a number of questions on each of these areas and asks for responses to assist the FSA in formulating a regulatory response.
The FSA believes that the benefits of short selling such as price efficiency and liquidity, normally outweigh the disadvantages and proposes that there should be no direct restrictions on short selling. However, the FSA sees advantages in having enhanced transparency of short selling and so proposes that disclosure requirements for significant short positions should be introduced for all UK listed stocks.You can read the rest of the FSA statement here. The discussion paper itself meanwhile is available in full here.
We realise that part of the government’s stimulus plan involves massive public works schemes, but are there even enough bureaucrats in officialdom to take care of the paper mountain the UK’s market regulator might be creating for itself here? It all rather depends on the definition of “significant short positions” we suppose.
On the other hand, a rule like the above might just kill off the London hedge-fund industry full stop (at least the hedge and/or alpha-generating part of it) so maybe this is a workload reducing measure?
Related link:
Lord Turner, VaR and the FSA – FT Alphaville