On 16 April 2026, the Financial Conduct Authority (FCA) published its Policy Statement (PS26/5) in relation to changes to the UK short selling regime.

Background

In January 2025, HM Treasury published the Short Selling Regulations 2025 (SSR 2025) to create a new legislative framework for the regulation of short selling giving the FCA the power to produce rules in relation to short selling activity.

In October 2025, the FCA consulted in CP25/29 on its proposed rules for short selling activity, within the framework established by the SSR 2025 and also published a draft Statement of Policy detailing the circumstances under which it would exercise its emergency powers.

Summary

The FCA have set out certain key changes to the proposals following the consultation, in particular:

  • Market maker exemption: The FCA explained that it has revised the rules to remove the requirement for market makers to notify each financial instrument they want to benefit from the exemption. Under the revised proposals, market makers will only be required to submit a single ‘activity based’ notification, which will enable them to use the exemption for market making activities in any financial instrument. However, the FCA also highlighted that it may still request additional information in relation to instruments from market makers to support its on-going supervision and reminded firms that market makers must also submit an ‘annual attestation’ to demonstrate their compliance with the conditions to use the exemption.
  • Issued share capital: The FCA also explained that it had received feedback in relation to what respondents considered to be the high cost and difficulty of sourcing reliable data on issued share capital to calculate net short positions. In response, the FCA highlighted that, while the relevant short selling guidance does set out FCA expectations for sourcing issued share capital, it will further consider whether it can replicate or leverage the existing arrangements in Chapter 5 of the Disclosure Guidance and Transparency Rules (DTR 5) to require companies to disclose their issued share capital for short selling purposes and that it will consider this during its upcoming review of the Disclosure Guidance and Transparency Rules.
  • Operational changes: The FCA further set out that, due to the it is making to the market maker exemption, it is not updating the arrangements to automate the notification process from the start of the new regime and, instead, the FCA will continue to receive notifications via email from the start of the new regime on 13 July 2026 but will consider alternative ways for market makers to more efficiently submit notifications and attestations in the future.
  • Implementation: Finally, the FCA had proposed to bring the new regime into force two months following the publication of the Policy Statement and final rules. However, in light of feedback from respondents, the new regime will come into force three months after publication and, further, to allow adequate time to make any operational changes it will continue to implement the new regime in two phases.

Next steps

The FCA sets out that the revised short selling rules will come into force on Monday 13 July 2026. Further, to allow sufficient time to implement the new regime alongside operational changes, it will be implemented in two phases.

The FCA explained that Phase 1 will take effect on the main commencement day, Monday 13 July 2026, which includes: (i) the implementation of the new short selling rules and its final Statement of Policy; (ii) changes to FCA systems to facilitate the disclosure of new aggregate net short positions (ANSPs); and (iii) the reportable shares list. In relation to Phase 2, this will take effect on Monday 30 November 2026, which includes an update to the system for position reporting to facilitate persons uploading and submitting multiple submissions in a single ‘bulk submission’.