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FSA tackles short selling

18 June 2008

Regulators are looking to reduce the "increased potential for market abuse" presented through the practise of short selling during rights issues.

The Financial Services Authority (FSA) is introducing a disclosure regime for significant short positions in companies undertaking rights issues.

The organisation is making the addition in its Code of Market Conduct, with the rule to come into effect from Friday 20th June.

FSA board members said the provisions "will require the disclosure of significant short positions in stocks admitted to trading on prescribed markets which are undertaking rights issues".

Officials are defining a significant short position as 0.25 per cent of the issued shares achieved via short selling or by any instruments giving rise to an equivalent economic interest.

The FSA recently announced the appointment of three new senior advisers for its wholesale and institutional business unit.

Jeremy Bennett, formerly of Credit Suisse First Boston, Simon Stockwell, from Lehman Brothers, and David Smith, a former senior partner in charge of KPMG Forensic Accounting, started on June 4th.

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