- Context
For the last decade or so, the UK short selling surveillance and disclosure has essentially lived in the same set of rules.
- The original EU Short Selling Regulation (EU SSR) came into force in November 2012 in response to the 2008 crisis, to impose transparency, restrict uncovered shorting, and give supervisors emergency powers over short selling.
- That regime (notification at 0.2%, public naming above 0.5%, incremental disclosures, buy-to-cover requirements, emergency intervention powers, sovereign debt scope) was simply ported into UK law as the “UK SSR” on 31 January 2020 when the UK left the EU, with only limited technical tweaks.
- Through Brexit and beyond, the core mechanics have not materially changed. The Financial Conduct Authority (FCA) has largely been administering an EU-designed process in a UK market. Industry has been operating to those legacy workflows.
In other words, for UK firms, the short-selling controls including how you calculate a net short, when you notify, how you disclose, how you evidence locate/borrow, and how you monitor FCA intervention risk has been structurally stable since 2012. Investment desks grew accustomed to managing around the public naming threshold and compliance teams invested in a control framework that has lasted (in some ways outlasting many other regulatory parameters).
In line with the FCA’s agenda for deregulation and competitiveness, on 28th October 2025 the FCA published Consultation Paper CP25/29 (“CP”), “Changes to the UK Short Selling Regime,” setting out how it intends to operationalise the new Short Selling Regulations 2025 (the “SSR 2025”). The FCA’s consultation paper states that the Treasury’s Call for Evidence concluded that it was not necessary to “fundamentally change the current regime, although it should be modified to alleviate disproportionate burdens” whilst still preserving orderly markets.
Unfortunately for those that manage short selling surveillance, and investors that have become accustomed to the rules, not “fundamentally changing” does not mean zero operating model impact. It will mean modernising the internal short-selling control architecture to align with a UK-native model rather than a continuation of the EU regime. That has consequences for reporting teams, trading desks, technology integration, and Board-level market conduct oversight.
The FCA will consult for 7 weeks.
- Public “name and shame” to anonymised aggregation (and why it matters less than people think internally, but more than people think externally)
Current state
Today, if you hold a net short position (NSP) at or above 0.5 % of a UK issuer’s issued share capital, your identity is published. The FCA publicly discloses who you are, which issuer you’re shorting, ISIN, position size, date. Any change in 0.1% increments above that threshold also triggers public disclosure.
Future state under SSR 2025
The FCA will stop publishing individual fund/firm names. Instead, firms will privately notify any NSP ≥ 0.2 %, and the FCA will publish a single Aggregate Net Short Position (ANSP) per issuer combining all such reportable shorts. The FCA will not disclose which firms are in that aggregate, nor the size of each constituent position. The FCA will publish historic ANSPs, so the market can see how aggregate short interest in an issuer evolved over time, in a downloadable machine-readable, filterable format.
Operational model impact
The approach outlined in CP25/29 appears to be moving closer to a U.S.-style model (focus on anonymised aggregate short interest, more market-friendly), and away from the old EU approach. That reduces the “shorting risk” premium. Hedge funds and alternative asset managers who previously steered away from UK names due to public exposure might now look to adapt or review their strategies.
The potential reputational risk of being named goes down, but operationally, it will not be a lighter burden of work:
- Threshold discipline tightens. You still must calculate and notify to the FCA at ≥ 0.2 % and each ±0.1 % movement thereafter, and that 0.2 % base reporting threshold would be embedded directly into FCA rules under SSR 2025 if it were to be adopted into Policy.
- The FCA will be publishing machine-readable aggregates daily. That means firms should assume the regulator will run analytics on those notifications, reconcile outliers, and challenge late/misaligned submissions. The consultation makes clear the FCA will validate, exclude suspected-bad data from publication, and potentially treat late or inaccurate submissions as a supervisory or enforcement issue.
The FCA has been public about their strategy of moving even further into principles-based regulation and appear to be utilising a more interventionist approach. For CP25-29 it means surveillance will be entirely bilateral, near-real-time, data-led, and easier for the FCA to pattern-match. It’s plausible to assume that by changing the way firms report, they will be taking a more proactive surveillance/enforcement approach when it comes to short selling.
This represents an operating model consideration for compliance and regulatory reporting teams to ensure that systems are adapted to fulfil the new requirements.
- Operational Considerations: what COOs, Heads of Compliance Monitoring, and Heads of Regulatory Reporting should look at
Reporting timelines
Current requirements mandate disclosure by 15:30 on the trading day after the position change. The FCA proposes moving the deadline to 23:59 on the working day following the working day on which the threshold event occurred. Firms get more hours and a timezone buffer (especially helpful for non-UK managers), but the FCA explicitly says it needs timely data to compile and publish next-day ANSPs.
Operating model impact
Compliance/Regulatory Reporting teams will have to re-time their daily short interest capture process. Firms might look to push the short calculation and validation cycle later into their internal EOD processes. That means an impact for processes and systems relating to:
- data from portfolio management systems,
- securities lending/locate confirmations,
- issued share capital figures (see 3.2),
- delta-adjusted derivatives exposure.
3.2 Calculation methodology
The core methodology to calculate a Net Short Position (NSP), including delta-adjusting derivatives, aggregating synthetic shorts, and treating ETFs/UCITS correctly, is being lifted into a new FCA Short Selling Sourcebook, largely replicating Articles 3, 5 and 9 of the UK SSR plus ESMA Q&A, but with clarifications.
Operating model impact
- Issued share capital sourcing. The FCA plans to give explicit guidance on where firms can source “issued share capital”: Companies House filings, commercial data feeds, and DTR 5.6.1R disclosures by issuers. Firms can rely on DTR 5.6.1R numbers in some cases, but may need to combine sources where voting-rights capital does not equate to total issued capital. You need a defensible golden source for denominator data.
- Management activity vs non-management activity. The FCA restates that asset managers effectively calculate NSP separately for (i) their discretionary management activity and (ii) any proprietary activity, and must aggregate sub-funds correctly (including umbrella/master-feeder structures) when notifying.
- Delta-adjustment discipline. All derivatives must be included on a delta-adjusted basis using current implied volume and last price, and long/short legs netted at issuer level. All divisions (risk/analysts/investors/operations teams) must align on one methodology.
3.3 Bulk submission & systems integration
The FCA plans to upgrade its reporting infrastructure so that firms can bulk submit multiple NSPs in a single upload, rather than one position at a time. Manual single-position entry will still exist, but bulk will become the expected route for higher-volume reporters.
Operating model impact
Ensure that you have the correct data in the correct format in order to be able to make the most of the new feature and create time efficiency. This might mean IT build.
3.4 Reportable Shares List (RSL) goes structured and machine-readable
Today, you work off the FCA’s “UK list of exempt shares,” which carves out instruments that are primarily traded outside the UK and therefore do not trigger certain UK reporting/cover requirements.
Under the new proposal, the FCA recommends to replace the “exempt shares” list with with a Reportable Shares List (RSL): the definitive list of which shares are in scope for UK position reporting and covering requirements. The list will be updated as detailed in the CP but critically will be in a machine-readable format to enable automation.
Operating model impact
The RSL list is proposed to be updated as detailed in the CP but critically will be in a machine-readable format to enable automation. That is both a challenge and opportunity. The frequency of the updates will mean caution needs to be taken to ensure that compliance monitoring programmes take account of changes more rapidly, it is no longer a static spreadsheet. In addition, if there are already automations in place, they will need to be replaced to look at different data with different logic.
From an opportunities perspective, the machine-readable format facilitates modern process and tech integration which will be warmly received by the industry.
3.5 Market maker exemptions
The FCA wants to streamline market maker exemption notifications by changing the information firms must submit, modernise the interface receiving the notification and keep publishing which firms have exemptions.
Operating model impact
Compliance and reporting teams must ensure that processes and procedures for relying on market maker exemptions are clearly documented and auditable.
- Governance, conduct and Board narrative
CP25/29 keeps, and clarifies, the FCA’s emergency powers to step in during stress events and require additional reporting, impose conditions, or even restrict short selling in exceptional circumstances where there’s a serious threat to market stability or a disorderly price decline. The FCA explicitly says it sets a “high bar” for using these powers and will only do so in exceptional circumstances to avoid disproportionate harm to liquidity and price formation.
The CP would suggest the FCA is signalling it views short selling as part of critical market infrastructure for liquidity, price discovery and risk management. This gives firms cover to defend legitimate short strategies internally and with investors.
However, the extension of escalation powers in a data-driven regulatory environment might also mean that the FCA can demand rapid extra data and impose temporary conditions.
- Key risks for firms
Regulatory reporting risk
- Late, incomplete or inconsistent NSP notifications will stand out immediately when reconciled against published ANSPs.
Data integration risk
- If you don’t build clean ingestion of the FCA’s machine-readable RSL and the FCA’s bulk submission format, you end up with manual workarounds that are not review-friendly and not future-proof (arguably a thematic risk across multiple surveillance priorities).
FCA Surveillance of conduct risk
- The anonymised public disclosure may lower reputational deterrence but the FCA is keeping (and clarifying) emergency intervention powers to curb disorderly sell-offs, rumour-driven shorting and settlement failures.
- If you run activist short strategies, expect more “prove this is not abusive” conversations with Market Conduct / Enforcement.
- Compliance teams need to ensure they are keeping up with the monitoring of these strategies in house.
- Key opportunities
a) De-risk reputational optics of shorting
No more automatic public disclosure of a firm when you cross 0.5 %. This gives firms more freedom to run legitimate short strategies.
b) Rationalise daily short-reporting into your global EOD controls review for efficiency
c) Automate scoping via the RSL
The FCA moving to a machine-readable RSL is a positive step to build automated processes to future-proof ongoing UK short-selling scope determinations.
d) More proportionate and market-friendly
Firms operating in these markets can reassure investors that the UK continues to move toward a proportionate, market-friendly disclosure model aligned with global practice.
- Recommendations
For larger firms the policy that comes out of this consultation paper might mean considerable cross-divisional operational impact. Start by:
- Setting up a Short-Selling Working Group (traders, regulatory reporting, compliance teams) to discuss potential operational impact.
- Mapping your current NSP processes and procedures end‐to‐end and attach ownership for clarity.