UK's Investment Managers Comment On Short Selling

Investors Offshore, London

04 February 2003

The UK's Imvestment Management Association has responded to the discussion paper on short selling issued by regulator the Financial Services Agency, agreeing with the emphasis on greater transparency of short selling in the market and welcoming the initiatives proposed by the FSA.

As there will be operational difficulties in providing full information on short positions, says the IMA, it accepts that, for the short term only, stock lending data could be used as a proxy for short positions in the market. However, the Association does have concerns about certain disclosure options under discussion. In particular, it says, disclosing the names of houses that are shorting would increase the risk of taking short positions, which could in turn hinder the proper functioning of the market.

Julie Patterson, Director, Regulation & Taxation, at the IMA, commented:

“We are pleased to note that the emphasis of the paper is on transparency of short selling rather than any limitations on short selling. Market transparency is of utmost concern to our members and we welcome initiatives by the FSA in this regard.

“But it is important that any information is timely, easily accessible, consistent and cost effective and that disclosure should not lead to a weakening of market structure. There needs to be a balance between the amount of information available and the need for a fully functioning stockmarket, where the acceptable uses of short selling do not become too risky.”

Recommended