FCA Finalises UK Short Selling Rule Changes

The FCA has finalised changes to UK short-selling rules. Most changes take effect on 13 July 2026, with bulk reporting taking effect in the second phase on 30 November 2026.

Many parts of the current regime will feel familiar. The reporting thresholds remain the same, and covering requirements continue to apply to in-scope shares. But firms will need to update how they identify in-scope shares, file reports, maintain “covering” records, and monitor what the FCA publishes to the market.

The UK regime now clearly diverges from the EU short selling regime, on which the UK rules were originally based. Firms should ensure their operational procedures differentiate between UK and EU rules.

Here’s what firms should know.

Key Dates

• 1 June 2026: The Electronic Submission System (ESS) user guide is expected to be updated with the new position reporting templates and group notification guidance.
• 13 July 2026: Phase 1 begins. The new FCA rules, Statement of Policy, Reportable Shares List (RSL), aggregate net short position disclosures, updated position reporting templates, and market maker exemption changes take effect.
• 30 September 2026: The FCA is expected to publish an updated ESS user guide and training video ahead of bulk reporting.
• 30 November 2026: Phase 2 begins. Bulk reporting becomes available in ESS.
• 29 January 2027: The transitional period for existing market maker exemptions ends.
• 1 June 2027: Market makers must submit their first annual attestation, with annual attestations due on the first working day of June each year thereafter.

UK Sovereign Debt and Sovereign Credit Default Swaps (CDS) Move Out of Scope

From 13 July 2026, UK sovereign debt and associated sovereign credit default swaps will no longer fall within position reporting or covering requirements. Exemptions for market makers and authorised primary dealers relating to sovereign debt and associated CDS will also no longer apply under the new regime.

Position Reporting: Same Thresholds, More Time to File

The position reporting thresholds are not changing. Firms must continue to notify the FCA when a net short position:

• Reaches or exceeds 0.2% of a company’s issued share capital
• Falls below 0.2% of a company’s issued share capital
• Reaches, exceeds or falls below each additional 0.1% increment above that 0.2% threshold

The filing deadline is changing. Reports will be due by 11:59 p.m. UK time on the working day after the reporting obligation is triggered. This replaces the current 3:30 p.m. UK deadline.

Firms will continue to calculate net short positions based on holdings at midnight on the relevant working day. The FCA clarified that firms do not need to carry out the calculation at that exact time, provided they use issued share capital data available at midnight and act reasonably when sourcing that information.

The FCA points firms to several possible sources for issued share capital, including DTR 5 disclosures under Disclosure Guidance and Transparency Rules, Companies House filings, and commercial or market data providers.

Updated Templates and ESS Guidance

The FCA is updating the position reporting templates for holder registration, notifications, corrections, and cancellations. The updated notification and correction templates include a mandatory “group notification status” field to support reporting at the group-level and entity-level.

The ESS user guide will be updated on 1 June 2026 to explain the new templates and group notification changes. Another ESS update is expected on 30 September 2026, ahead of Phase 2, to explain how bulk reporting will work.

Reportable Shares List (RSL) Replaces the Exempted Shares List

The current Exempted Shares List will be replaced by the RSL. The RSL is designed to help firms identify the companies and UK-traded shares that are in scope of the short-selling rules.

The RSL will show each class of share issued by a company and admitted to trading on a UK trading venue, the date the share was added to the list, and the main class of ordinary share to use for position reporting.

For covering purposes, firms can rely on the RSL to identify the admitted shares that are subject to the covering rules. For position reporting, firms can rely on the RSL to identify the companies whose issued share capital is subject to the reporting rules. Firms should still consider whether those companies have other share classes that form part of issued share capital but are not admitted to trading on a UK or on any trading venue.

A test RSL is already available, so firms can check how the file works with their systems before 13 July 2026. After the new regime begins, the FCA expects to update the RSL fully every two years, monthly, by midday on the first working day of each month, and on an adhoc basis in exceptional circumstances.

Covering Requirements Still Apply

The rules on covering short sales remain a central part of the regime. Before entering into a short sale of an in-scope admitted share, firms must still have borrowing, agreement-to-borrow, or locate arrangements in place to ensure timely settlement.

The FCA has also specified a recordkeeping requirement. Firms must retain evidence of covering arrangements for five years.

Public Disclosure Moves to Aggregated Company-Level Data

Public disclosure is changing. The FCA will no longer publish individual net short positions by holder. Instead, it will publish anonymised aggregate net short positions by company.

The aggregate figures will be based on individual net short positions reported to the FCA at or above the 0.2% threshold. The disclosure will show the company name, the International Securities Identification Number (ISIN) of the main class of ordinary shares, the aggregate net short position percentage, and the latest position date included in the calculation.

The FCA expects to publish current aggregate net short positions from 12:00 p.m. by two working days after the positions are reported. It will also publish historical aggregate data as current aggregate positions are replaced by newer figures.

Individual net short positions published under the current regime will be archived on the FCA website and will remain available to view.

Bulk Reporting Arrives in Phase 2

Bulk reporting will not be available on 13 July 2026. It will be introduced in Phase 2 from 30 November 2026.

From that date, firms will be able to submit multiple notifications for the same position holder at the same time by uploading a CSV file through the ESS portal. The FCA plans to update the ESS user guide and publish a training video on 30 September 2026 so that firms can prepare before bulk reporting begins.

Market Maker Exemption Changes

The market maker exemption is also changing. It will move from an instrument-based exemption to an activity-based exemption. Market makers will submit one notification that covers market making activity across financial instruments, rather than notifying the FCA instrument by instrument.

What Firms Can Do Now

Firms should use the time before 13 July 2026 to assess required updates to their short selling processes. Useful steps include:

• Compare current reference data with the test RSL and plan for monthly RSL updates.
• Update procedures to reflect the 11:59 p.m. UK time reporting deadline.
• Review the updated reporting templates, including the new group notification status field.
• Confirm how group-level and entity-level reporting will work in practice.
• Review how issued share capital data is sourced and documented.
• Decide whether bulk reporting will be useful and prepare CSV files before 30 November 2026.