The United Kingdom’s financial regulator has launched a formal consultation on proposed reforms to the country’s short selling regulatory framework, marking a significant step in the post-Brexit evolution of capital markets oversight. On 28 October 2025, the Financial Conduct Authority opened Consultation Paper CP25/29, inviting market participants and stakeholders to submit responses by 16 December 2025 to a suite of draft rules and guidance that would replace elements of the current regime with a more streamlined, coherent UK-specific structure. The consultation paper proposes a new Short Selling Sourcebook within the FCA Handbook that consolidates rules and guidance previously dispersed under EU-derived legislation, reflecting both feedback from industry and the government’s ambition to maintain robust safeguards while reducing disproportionate burdens on firms engaging in short selling activity.​ The existing UK Short Selling Regulation, itself transposed into domestic law after Brexit, will remain in force until the new framework is implemented, providing continuity and predictability for market participants.

Under the proposals, the deadline for reporting changes in net short positions would be extended to the end of the business day following the trading day on which the obligation is triggered, offering greater operational flexibility and alignment with market practice. The regulator also plans to clarify the methodologies used to calculate net short positions and to revise the criteria for determining which admitted shares fall within the scope of reporting and covering requirements by publishing a dedicated reportable shares list. Record-keeping requirements for covering arrangements would be clarified, and market maker exemption notifications would be streamlined to reduce administrative friction, including shorter notification windows.​ A key shift would see aggregated net short positions published in anonymised form rather than naming individual holders, a change designed to preserve market integrity while mitigating the risk of revealing trading strategies. The consultation also incorporates draft guidance on the regulator’s approach to exercising emergency powers relating to short selling and confirms that the core objectives of transparency, orderly market functioning and investor protection will be retained.

The proposed framework anticipates a phased implementation, with initial measures such as the reportable shares list and aggregated position disclosures coming into effect first, followed by subsequent systems updates for position reporting and market maker notifications. Final rules and a policy statement are expected to be published ahead of the regime’s commencement, offering firms an opportunity to prepare for the transition. By recalibrating the short selling regime, the FCA aims to support UK market competitiveness and resilience while preserving appropriate oversight and confidence in the financial system.