The FCA has finalised the most significant overhaul of the UK short selling framework since Brexit. Published in PS26/5, the new rules and guidance implement the Short Selling Regulations 2025 (SSR 2025) and introduce a dedicated Short Selling Sourcebook within the FCA Handbook. While the core discipline of the regime remains intact, with transparency around significant net short positions and strong supervisory powers, the FCA is reshaping how firms identify instruments, notify exemptions, and report positions.
The changes are designed to improve market efficiency, reduce disproportionate compliance costs, and modernise operational processes. Implementation will occur in two phases:
- Phase 1: 13 July 2026
- Phase 2: 30 November 2026
For firms engaged in short selling, securities lending, market making, or market data provision, the next six months will be critical for system readiness, data mapping, and governance updates.
What’s Changing and Why It Matters
The new regime largely replicates the existing UK SSR but introduces targeted refinements that affect day‑to‑day operations. The most material changes include:
UK sovereign CDS removed from reporting and coverage rules
Net short position reporting and covering requirements will no longer apply to UK sovereign CDS. At the same time, the market‑making exemption for UK sovereign debt is removed, narrowing the scope of eligible MME activity.
Reporting deadline extended to 23:59 on T+1
This is one of the most operationally meaningful changes. Firms gain more time, but expectations rise: reconciliations, validations, and approvals must now fit within a clear end‑of‑day control window.
New guidance on issued share capital, group reporting, and templates
The FCA clarifies how firms should calculate issued share capital, manage group‑level reporting arrangements, and complete updated notification templates.
A new “reportable shares list” replaces the exempt shares list
This is a structural shift. Instead of relying on a static exemption concept, firms must now ingest and monitor the FCA’s reportable shares list, available in CSV and XLSX formats. Controls must ensure the list is refreshed and mapped correctly to internal instrument masters.
Market Maker Exemption becomes activity‑based
MME notifications will no longer be instrument‑specific. Firms must evidence qualifying activity at the desk or entity level, requiring updated governance, documentation, and potentially re‑notifications.
FCA to publish Aggregate Net Short Positions (ANSPs)
The FCA will publish aggregated net short positions at or above 0.2%, without identifying individual holders. This changes the transparency signal available to issuers, analysts, and market participants.
FCA retains emergency intervention powers
The regulator continues to hold the ability to prohibit or restrict short selling in exceptional circumstances.
Implementation Timeline
Phase 1 – 13 July 2026
- New short selling rules and Statement of Policy take effect
- FCA begins publishing Aggregate Net Short Positions
- Reportable shares list becomes operational
Phase 2 – 30 November 2026
- Enhanced FCA reporting system goes live
- Supports bulk uploads and multi‑position submissions
The FCA has also published an Operational Guide outlining system expectations and transition steps.
Why the UK Is Changing the Regime Now
The UK SSR originated as EU law and was carried over post‑Brexit. The Financial Services and Markets Act 2023 (FSMA 2023) created the mechanism to replace retained EU law with UK‑designed regulatory frameworks. SSR 2025 is the first major step in that process.
By moving short selling requirements into a dedicated FCA Sourcebook, the regulator gains:
- Clear rule‑making authority
- Greater flexibility to refine operational requirements
- A more coherent, UK‑specific supervisory framework
The policy intent is continuity with improvement: retain transparency and oversight, but streamline operational burdens.
What This Means for Market Participants
Asset Managers & Hedge Funds
- Must map net short calculations to the reportable shares list
- Need to align issued share capital logic with updated FCA guidance
- Should review group‑level reporting arrangements and aggregation rules
Broker‑Dealers, Prime Brokers & Market Makers
- Must revisit MME governance and evidence frameworks
- Should update onboarding terms and locate/borrow controls
- Need to prepare for activity‑based exemption notifications
Securities Lenders & Lending Agents
- Will face increased demand for timely, accurate stock loan data
- Must support audit trails for coverage and position validation
Trading Venues & Market Data Providers
- Should prepare for increased use of reportable‑share identifiers
- Need to incorporate ANSP publications into analytics and surveillance
Issuers
- Will see aggregate short interest rather than named disclosures
- Should update internal communications and investor‑relations messaging
How Firms Should Prepare: A Practical Readiness Plan
Firms should treat Phase 1 as a data and controls change, and Phase 2 as a reporting‑operations change. A robust implementation plan includes:
Data Mapping
- Ingest the FCA reportable shares list
- Map to ISIN/SEDOL/venue identifiers
- Implement scheduled refresh controls
Calculation Engine Review
- Validate net short logic across equities, derivatives, and baskets
- Confirm aggregation rules and corporate‑action handling
- Align issued share capital calculations with FCA guidance
Exemption Governance
- Re‑paper market maker activity criteria
- Build an evidence pack (activity metrics, desk mandates, records)
- Plan for any required re‑notifications
T+1 End‑of‑Day Controls
- Define position capture cut‑offs
- Implement reconciliations and breaks management
- Ensure audit‑ready approval workflows
Reporting Connectivity
- Prepare for the enhanced FCA system
- Build and validate bulk‑upload files
- Conduct parallel testing ahead of Phase 2
Monitoring & Assurance
- Create MI for threshold breaches and late submissions
- Update policies, procedures, and training
- Strengthen incident escalation and supervisory evidence
Conclusion: A More Modern, More Operational UK Short Selling Regime
The FCA’s new short selling framework preserves the core transparency and supervisory principles of the existing regime while modernising the operational infrastructure that supports it. With the first phase going live in July 2026, firms should prioritise data readiness, exemption governance, and T+1 reporting controls to ensure a smooth transition.
How Funds‑Axis Supports Implementation
Funds‑Axis combines regulatory expertise with scalable reporting technology to help firms meet the new UK short selling requirements, from ingesting the reportable shares list to managing net short calculations, exemption workflows, and FCA submissions.
Stay tuned for further updates as the 2026 implementation phases progress.
