We use cookies to help us to improve our site and enables us to deliver the best possible service and customer experience. By clicking accept or continuing to use this site you are agreeing to let us share your data with third parties in accordance with our privacy policy. Learn more

Compliance

FSA’s Statement on Short Positions for Financial Companies

Posted on 29 Oct 2008

Your attention is drawn to the Disclaimer below

The Financial Services Authority (“FSA”) introduced as of midnight of the 18th of September 2008, new provisions to the Code of Market Conduct to prohibit the active creation or increase of net short positions in publicly quoted financial companies. The FSA has provided a list of companies which fall within this sector, and which is included as Appendix A in this document.

From Tuesday, 23rd of September 2008, The FSA will require all regulated entities to disclose on a daily basis all net short positions in excess of 0.25% of the ordinary share capital of the relevant companies held at market close of the previous working day. This will apply for all positions held starting as of Friday 19th of September to date.

Effectively, authorised firms will not be able to increase net short positions starting from the 19th of September 2008. This also applies to intraday adjustments. The only firms exempt from this regulation are “market makers” as defined in the FSA Handbook.

These provisions also affect uncovered short positions, and include, but are not limited to, the usage of options, spread bets, CFDs and OTC transactions.

The FSA has defined “net short positions” as the net short balance of all holdings in the list of companies provided, and as amended from time to time, of the aggregate holding of both long and short positions, including all authorised investments and OTC transactions.

The FSA will treat non-compliance as potential Market Abuse, which may incur enforcement action, such as fines and public censures.

Note that the FSA has indicated that short positions held by investment firms on a non-discretionary basis for clients, are the responsibility of the client and not the firm.

The provisions are expected to remain in force until the 16th of January 2009, although the FSA has already noted that these provisions will be further reviewed around the 18th of October 2008 and that they may be subject to amendments in the meantime. The FSA may apply similar limitations to other market sectors.

The FSA has created a short FAQ document for any interested parties which can be found herehttp://www.fsa.gov.uk/pubs/other/short_selling_faqs.pdf

Appendix A

This list has been prepared by the FSA and is subject to review (for a copy of the list please go to:http://www.fsa.gov.uk/pubs/handbook/list_instrument200850.pdf):

1 ADMIRAL GROUP PLC
2 ALLIANCE & LEICESTER PLC
3 ALLIANCE TRUST PLC
4 ARBUTHNOT BANKING GROUP PLC
5 AVIVA PLC
6 BARCLAYS PLC
7 BRADFORD & BINGLEY PLC
8 BRIT INSURANCE HOLDINGS PLC
9 CHESNARA PLC
10 EUROPEAN ISLAMIC INVESTMENT BANK PL
11 FRIENDS PROVIDENT PLC
12 HBOS PLC
13 HIGHWAY INSURANCE GROUP PLC
14 HSBC HOLDINGS PLC
15 ISLAMIC BANK OF BRITAIN PLC
16 JUST RETIREMENT HOLDINGS PLC
17 LEGAL & GENERAL GROUP PLC
18 LLOYDS TSB GROUP PLC
19 LONDON SCOTTISH BANK PLC
20 NOVAE GROUP PLC
21 OLD MUTUAL PLC
22 PRUDENTIAL PLC
23 RESOLUTION PLC
24 ROYAL BANK OF SCOTLAND GROUP PLC
25 RSA INSURANCE GROUP PLC
26 ST JAMES’S PLACE PLC
27 STANDARD CHARTERED PLC
28 STANDARD LIFE PLC
29 TAWA PLC
For further enquiries and assistance, please email us at info@www.lavenpartners.com or call Jerome Lussan or Max Ferri on +44 207 838 0010.