On 26 January 2024, the FCA published Primary Market Bulletin 47, which focuses on recent developments concerning the UK’s short selling regulation and the Credit Rating Agency UK Market Share Report for 2022.

Short selling

In relation to the UK’s short selling regime the Bulletin covers:

  • Recent developments: Firms are reminded that HM Treasury has published a draft statutory instrument, the Short Selling Regulations 2024, together with a policy note which sets out how the Government currently intends to change the UK’s regulatory regime for short selling (although it does not set out all of the elements of the proposed new regime). The key elements of the proposed new regime includes short selling in shares and related instruments being defined as a new designated activity.
  • Government response – sovereign debt and credit default swaps: Readers are also reminded that HM Treasury has published its response to its earlier consultation on the regulation of short selling of sovereign debt and credit default swaps (CDS). The key proposals made by the Government are to: (i) remove requirements currently placed on investors when taking out short positions in sovereign debt or sovereign CDS, and the related reporting requirements; and (ii) retain sovereign debt and CDS in scope of the FCA’s emergency intervention powers for short selling, which will be treated the same as other financial instruments.
  • The Short Selling (Notification Threshold) Regulations 2023: This statutory instrument, which enters into force on 5 February 2024, increases the notification threshold for the reporting of net short positions in shares to the FCA from 0.1% to 0.2%.

CRA UK Market Share Report for 2022

As for the Credit Rating Agency UK Market Share Report for 2022 the Bulletin notes that it reveals continued concentration of market share amongst 3 credit rating agencies (CRAs). It also serves as a reminder to issuers of their regulatory obligation under Article 8d (1) of the UK CRA Regulation to consider appointing at least one CRA with no more than 10% of total market share when they intend to appoint at least 2 CRAs for the credit rating of the same issuance or entity. The FCA also reminds firms that as part its supervision of the UK CRA Regulation, it may engage with issuers or related third parties to understand the nature of their consideration of a CRA with less than 10% total market share and how the selection decision is evidenced. Issuers are responsible for ensuring that they understand the UK CRA Regulation and complying with it.