The UK Financial Services Authority (FSA) wants to extend the current disclosure regime for significant net short positions in the stocks of UK financial sector companies. The present ban is due to expire on June 30, 2009.

By extending the regime, the FSA hopes to continue to reduce the potential for abusive behaviour and disorderly markets. The regulator expects the requirements in the longer to be replaced by a broader short selling regime for all UK stocks.

At present disclosures will only need to be made if a net short position exceeds 0.25% of a company's issued shared capital or increases by 0.1% bands above that (for example, net short position reaching 0.35%. 0.45% and upward).

The short selling disclosure requirement was first introduced on September 18, 2008 and extended in an amended form on January 16, 2009.

The consultation period on the FSA proposals (consultation paper CP09/15) will close June 12 so any new measures can be put in place before the current regime expires.

Reinforced enforcement
In another move the regulator is looking is to increase the firepower of its enforcement division by hiring several lawyers from leading City firms.

The recruits will boost the watchdog's fight against insider dealing, with more than 80 staff dedicated to investigating so-called wholesale cases that involve financial institutions and their employees.

"The FSA is clearly showing that it has a taste for criminal investigations," commented Neill Blundell, of financial crime at international law firm Eversheds.

Following its first ever successful prosecution for insider dealing in March, the FSA has begun development of "a highly experienced team of lawyers and investigators whose sole responsibility will be to investigate and prosecute insider dealing cases" noted Blundell.