British regulator eases short selling rules for hedge funds

LONDON (Reuters) -Britain's financial markets watchdog on Tuesday confirmed that it would stop publishing the identity of stock market short sellers, amid a wider push by UK regulators to cut red tape and make the country more competitive.

A short position is a bet that a company's stock price will decline. Under the revised regime, the Financial Conduct Authority will only publish anonymised, aggregate net short positions, based on private notifications from market participants holding more than 0.2% of a company's shares.

In its seven-week consultation, the FCA also said it planned to extend the deadline by which short sellers are required to disclose a change in position and simplify the exemption from notification for market makers. 

The likely shape of the regime had already been welcomed by hedge funds and will align the UK more closely with the United States, which discloses only aggregate positions.

The overhaul follows legislation passed in January that gave the FCA new powers to shape short selling rules and set in motion some of the UK regulatory changes, replacing a framework that had been inherited from the European Union.

That legislation removed the requirement for short sellers to publicly disclose their positions of more than 0.5% in individual UK-listed companies, replacing it with anonymized reporting of aggregate positions in a company.

Hedge funds had criticised the previous rules, arguing they led to herding behaviour and discouraged investment in proprietary research. 

Rob Hailey, Head of EMEA government affairs at the Managed Funds Association, an industry lobby group, said the alternative asset management sector supported the proposals set out by the FCA. "Smart reforms will enhance UK financial markets, attract investment, and support economic growth," he said in comments sent ahead of the FCA's announcement. 

(Reporting by Phoebe Seers, Editing by Iain Withers and Tommy Reggiori Wilkes)