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| UK short-selling ban to be lifted | UK short-selling ban to be lifted |
| (39 minutes later) | |
| The ban on short-selling of financial shares in the UK is to be lifted, according to Britain's City watchdog, the Financial Services Authority (FSA). | The ban on short-selling of financial shares in the UK is to be lifted, according to Britain's City watchdog, the Financial Services Authority (FSA). |
| The FSA said the ban would expire as planned on 16 January, despite calls from MPs to keep it in place. | The FSA said the ban would expire as planned on 16 January, despite calls from MPs to keep it in place. |
| But rules requiring the disclosure of "short" trading positions will be kept for an extra six months, the FSA said. | But rules requiring the disclosure of "short" trading positions will be kept for an extra six months, the FSA said. |
| Short-selling is when investors borrow shares which they sell, hoping to buy them back later at a lower price. | Short-selling is when investors borrow shares which they sell, hoping to buy them back later at a lower price. |
| The regulator said it would reinstate the ban if it saw fit. | The regulator said it would reinstate the ban if it saw fit. |
| A temporary ban on short-selling was introduced for 34 financial stocks in September last year due to the financial turmoil in the markets. | A temporary ban on short-selling was introduced for 34 financial stocks in September last year due to the financial turmoil in the markets. |
| FROM THE TODAY PROGRAMME More from Today programme | |
| Announcing the ban's end, Sally Dewar of the FSA, said: "We believe that these proposals are the right measures for maintaining orderly markets. | Announcing the ban's end, Sally Dewar of the FSA, said: "We believe that these proposals are the right measures for maintaining orderly markets. |
| "Continuing the disclosure obligations as we propose will reduce the potential for abusive behaviour and disorderly markets," she said. | "Continuing the disclosure obligations as we propose will reduce the potential for abusive behaviour and disorderly markets," she said. |
| Rules changes | Rules changes |
| The financial watchdog has already scrapped rules which required automatic daily disclosure of short trading positions by investors, regardless of whether there had been a change in the position. | The financial watchdog has already scrapped rules which required automatic daily disclosure of short trading positions by investors, regardless of whether there had been a change in the position. |
| The regulator had been urged to maintain the ban on short-selling, given the continuing problems in the stock market and as bank shares continue to slide. | The regulator had been urged to maintain the ban on short-selling, given the continuing problems in the stock market and as bank shares continue to slide. |
| Last week, Liberal Democrat Treasury spokesman Vince Cable joined some MPs in asking for an extension to the ban, or at least for it to be maintained for banking stocks. | Last week, Liberal Democrat Treasury spokesman Vince Cable joined some MPs in asking for an extension to the ban, or at least for it to be maintained for banking stocks. |
| When the ban was introduced, FSA chief executive Hector Sants said that while short-selling was a legitimate investment technique in normal market conditions, the "current extreme circumstances" had given rise to "disorderly markets". | When the ban was introduced, FSA chief executive Hector Sants said that while short-selling was a legitimate investment technique in normal market conditions, the "current extreme circumstances" had given rise to "disorderly markets". |
| Short-selling was also blamed for steep falls in HBOS shares and trading in the stock was subject to an FSA investigation last year. | Short-selling was also blamed for steep falls in HBOS shares and trading in the stock was subject to an FSA investigation last year. |
| Yet the regulator found no evidence that rumours were spread about the bank in a bid to manipulate its share price. | Yet the regulator found no evidence that rumours were spread about the bank in a bid to manipulate its share price. |
| The industry body for the hedge fund industry, Aima, welcomed the proposals to lift the ban. | The industry body for the hedge fund industry, Aima, welcomed the proposals to lift the ban. |
| Chief executive Andrew Baker said: "Although we naturally support efforts by policymakers and regulators to achieve stability in markets, particularly during emergency conditions, we do not feel that this ban achieved its stated aims." | Chief executive Andrew Baker said: "Although we naturally support efforts by policymakers and regulators to achieve stability in markets, particularly during emergency conditions, we do not feel that this ban achieved its stated aims." |