Capital markets – FCA publishes new rules on short selling

The FCA has published Policy Statement PS26/5 and an operational guide setting out its final new rules for the UK short selling regime.

The changes implement the UK’s Short Selling Regulations 2025 and replace the assimilated EU law on short selling. They follow a call for evidence published by the Treasury in December 2022 and an FCA consultation in autumn 2025 (CP25/29, read more on our blog here).

What is not changing?

The Treasury had concluded that it was not necessary to fundamentally change the current regime, but that it could be improved and streamlined in some areas.

Consequently:

• net short positions continue to need to be notified to the FCA at a 0.2% notification threshold, with further notifications at each 0.1% increment;
• the methodology for calculating net short positions, including the scope of financial instruments to be included and the treatment of funds and group structures, is also retained; and
• short sales must still be covered – through borrowing, enforceable claims or locate arrangements.

The FCA will also retain its emergency powers to intervene and restrict or prevent short selling in exceptional market conditions.

Changes under the new regime

The changes under the regime, which will be contained in a new dedicated Short Selling Sourcebook in the FCA Handbook, include:

• Aggregate net short positions (ANSPs) – The key change is that the net short positions of individual position holders (above the 0.2% reporting threshold) will be combined and anonymised – the FCA will publish aggregate net short positions relating to each in-scope company on a T+2 basis. This will reduce visibility for listed companies over who holds short positions.
• New reportable shares list – A new reportable shares list will be published and maintained by the FCA so that shares within the scope of the new regime are easier to identify. This will replace the current list of exempt shares.
• Reporting deadline – The reporting deadline will move to 23:59 on T+1 – as opposed to 15.30 the next trading day – with new FCA guidance on when and how the calculation is made.
• Issued share capital data – The FCA has provided additional guidance on the sources of information that can be used to identify a company’s issued share capital, but has declined at this stage to mandate a method or establish a central source of issued share capital for listed companies. It says it will consider this issue further as part of its upcoming review of the Disclosure Guidance and Transparency Rules.
• Market maker exemption – Market makers will only be required to submit a single ‘activity based’ notification, which will enable them to use the exemption for market making activities in any financial instrument (as opposed to notifying each financial instrument they want to benefit from the exemption). Market makers will have to make an annual submission to demonstrate their compliance with the conditions to use the exemption.

The new rules will come into force in two phases:

• 13 July 2026: implementation of the new short selling rules and the FCA’s Statement of Policy, system updates to facilitate the disclosure of new ANSPs and introduction of the reportable shares list; and

30 November 2026: enhancements to the FCA’s systems to allow bulk submission of multiple net short positions.