The UK Financial Services Bill has put forward a proposal that would allow the FSA power to prohibit, or require disclosure of, short selling.
The FSA will also have power to install emergency rulings on the activity of short selling, without having to undertake consultation with trade bodies and industry participants.
According to the text of the Bill:
The Authority may make short selling rules (and may subsequently amend those rules) without complying with section 155 (consultation in relation to proposed rules) if it considers that it is necessary to do so, in order to(a) maintain confidence in the UK financial system; or(b) protect the stability of the UK financial system.
(2) Any rules made by virtue of subsection (1) (emergency rules) cease tohave effect at the end of the period of three months beginning with theday on which the rules are made (the relevant day); but this is subjectas follows.
The FSA also has power over industry participants to disclose information on short selling in such form as it may reasonably require.
The FSA banned short selling of financial stocks from September 2008 to January 2009 after intense political pressure. Short positions on financial stocks must still be reported to the FSA.
Giles TurnerNews Editor
Related Information: UK Financial Services Bill