The UK government wants to see an end to the requirement that hedge funds must publicly disclose their large short positions in company stocks, as the practice encourages copycat trades and risks short squeezes, according to a report by Bloomberg.
In a paper published earlier this week, the government revealed plans to replace the public register of short positions worth 0.5% or more of any London-listed firm with an aggregated list. The proposal comes after a government survey found that asset managers believe the current rules “negatively impact the price discovery process”.
Under the new proposal, which will see the UK diverge from the European Union standards, funds will need to notify the Financial Conduct Authority privately of any short positions totalling over 0.2% of a company’s stock, rather than the current 0.1% threshold.
According to the government paper, the new aggregated list will “provide the market with greater transparency on the overall net short position in a company’s share than the current regime”.