Contradictory short selling

Author: | Published: 1 Feb 2009

The FSA may be acting outside of its designated legal powers by allowing its short selling ban to end but continuing to impose disclosure requirements on short positions.

On January 5 the UK regulator announced that it would not renew its ban on short selling, which was introduced in September expired in mid-January. But the disclosure regime that was implemented alongside the ban will remain in place until June 2009.

Under the Financial Services and Markets Act of 2000 (FSMA), the FSA has the power to enforce the terms of its Code of Market Conduct in cases where market abuse is suspected. This can lead to official investigations and criminal proceedings.

But according to Section 118 of FSMA, market abuse is defined as "improper conduct that undermines the UK financial...