From the trading floors of London to the balance sheets of global funds, the mechanics of short selling have long served as a barometer of confidence in listed companies. Today marks a quiet but significant shift in how that activity is policed. The Financial Conduct Authority has brought into force Phase 1 of a new domestic short selling regime, severing the final regulatory tether to the onshored EU Short Selling Regulation and replacing it with rules written expressly for British markets.
The transition rests on the Short Selling Regulations 2025 and fresh provisions in the FCA Handbook. At its core stands the Reportable Shares List, which now determines precisely which equities trigger position notifications and covering obligations. Firms must consult this list from today, a cleaner instrument than the previous list of exempt shares. The FCA published a test version back in April precisely so market participants could ready their systems without last-minute disruption.
Reporting deadlines have been sensibly extended. Net short positions must now be disclosed by 23:59 UK time on the following working day, removing an earlier compression that added little to stability but imposed unnecessary operational cost. This adjustment reflects a regulator alive to the realities of modern trading rather than the rigid template inherited from Brussels.
Targeted reforms to exemptions and disclosure
Exemptions once enjoyed by market makers in UK sovereign debt have been removed. From today those activities fall outside the prior carve-out, though the FCA retains emergency powers that continue to cover these instruments. The market maker exemption itself has shifted to an activity-based test supported by an annual attestation, replacing the burden of transaction-by-transaction notifications. Such changes trim disproportionate compliance demands without sacrificing oversight.
The FCA will publish aggregate net short positions by company, rolling up individual holdings that meet or exceed the 0.2 per cent threshold. Individual short sellers remain unidentified. Firms must keep records of covering arrangements for five years, a straightforward discipline that supports audit trails and deters abuse.
Our short selling rules came into force on Monday 13 July 2026.
The FCA itself described the new Sourcebook within its Handbook as largely replicating existing provisions to keep markets orderly while stripping out unnecessary costs. It has set a deliberately high bar for invoking emergency powers, reserving them for exceptional conditions only. These statements signal regulatory restraint rather than reflexive tightening, an approach that should reassure participants who feared the new framework might stifle legitimate activity.
