On 23 March 2020, UK FCA issued statement short-selling in UK Markets.
- FCA is working with international counterparts in US, EU and elsewhere, so markets can remain open and orderly, and so they can continue to perform their essential role.
- Despite significant volatility, markets continue to operate in an orderly fashion in UK.
UK Ban Shorts in Stocks Requested by EU NCA
- Some European countries have introduced short selling bans, and, in line with FCA's standard practice, the UK have followed those bans, where requested, on shares for which the relevant European National Competent Authorities (NCAs) are responsible.
But No General UK Short-Selling Ban
- However, FCA has not introduced ban on short sales; most European NCAs have not introduced such bans; nor has the United States or any other major financial market.
- The FCA continues closely to monitor market activity, including short selling activity.
- Aggregate net short selling activity is a low as a percentage of total market activity.
- There is no evidence that short selling has been the driver of the recent market falls.
- A great many investment strategies rely on ability to take 'long' and 'short' positions.
- The benefit wide range of ordinary investors including pension funds for employees.
- The FCA also notes that short selling is a critical underpinning of liquidity provision.
- The loss of these benefits would need to be carefully balanced before determining that any intervention to prevent short selling was appropriate.