FIA EPTA welcomes the opportunity to respond to the HM Treasury Call for Evidence on the UK Short Selling Regulation. We are very supportive of HMT’s statements regarding the important role short selling plays in the efficient functioning of financial markets and see a great opportunity to bring about pragmatic reform of the UK Short Selling Regulation.
In particular, FIA EPTA supports the removal of Emergency Intervention Powers enabling the FCA to impose short-sell bans. Whilst the FCA has exercised these powers with admirable circumspection, short-sell bans have been shown to be detrimental to markets resulting in increased transaction costs, more volatility and less liquidity. Furthermore, we believe market confidence would be improved if the prospect of bans were removed altogether. We also believe UK markets would benefit from a streamlined Market Maker Exemption whereby lengthy approval periods are removed in favour of a robust self-certification regime to support ongoing liquidity provision, particularly in times of market stress. In addition, we believe that alleviating the operational burden of the Net Short Position reporting obligation to the FCA by increasing the reporting threshold to 0.5% would provide more meaningful information to the regulator and make UK markets more internationally competitive.
- Market Structure