The new UK short selling regime: FCA publishes final rules and operational guidance

On 16 April 2026, the Financial Conduct Authority (FCA) published Policy Statement PS26/5 setting out its final rules for the new UK short selling regime, together with a final Statement of Policy on the use of its emergency powers and an operational guide explaining how and when the new rules will come into force.

The new rules implement the changes introduced by the Short Selling Regulations 2025 (SSR 2025), which established the legislative framework for replacing the UK Short Selling Regulation (UK SSR) – assimilated EU law that was incorporated into UK law by the European Union (Withdrawal) Act 2018. The FCA's final rules follow its consultation in CP25/29, which closed in December 2025 (see our previous blog post here for details).

The new regime will be implemented in two phases, with the main commencement day (phase one) on 13 July 2026 and a second phase on 30 November 2026.

What is changing?

The FCA's final rules create a new dedicated Sourcebook within the FCA Handbook, consolidating all short selling rules and guidance. While the rules largely replicate existing provisions, a few of the most notable changes are set out below. In response to the feedback it received, the FCA has made some changes to the proposals in CP25/29. 

Sovereign debt and credit default swaps. UK sovereign debt and associated credit default swaps (CDS) will be removed from the scope of position reporting and covering requirements by the SSR 2025. Existing market maker exemptions and authorised primary dealer exemptions relating to sovereign debt and associated CDS will cease to apply from 13 July 2026. The FCA's emergency powers will, however, continue to cover short selling activity in these instruments.

Position reporting. The reporting thresholds remain unchanged at 0.2% of a company's issued share capital and each 0.1% increment above that threshold. However, the reporting deadline has been extended from 3:30pm to 11:59pm (UK time) on the working day following the day on which a reporting obligation is triggered. The FCA has also clarified how individual legal entities within a group need to notify their positions at both entity and group level. New guidance also clarifies that, while net short positions must be calculated as at midnight on the relevant working day, firms need not perform the calculation at midnight itself. The FCA has additionally issued guidance on sourcing issued share capital data, noting that firms should act reasonably when calculating their net short position, ensuring that it is a fair and reasonable representation of a company’s issued share capital. 

In response to feedback, the FCA announced in PS26/5 that it is looking at the possibility of leveraging the existing arrangements in DTR 5 in order to require companies to disclose their issued share capital for short selling purposes, which would make it easier for market participants to calculate net short positions. The FCA will consider this as part of its upcoming review of the Disclosure Guidance and Transparency Rules.

Reportable Shares List. A new Reportable Shares List (RSL) will replace the current list of exempt shares, identifying every class of share admitted to trading on UK trading venues that is subject to the short selling rules. For issuers with multiple classes of shares admitted to trading, the RSL will identify the main class of ordinary shares for position reporting purposes. The RSL will be updated completely every two years on the first working day of April, with monthly updates to account for shares being admitted to or removed from trading on UK trading venues. The FCA has published a test RSL in CSV and XLSX formats to allow firms to prepare ahead of commencement.

Covering requirements. The covering rules remain largely the same, but the FCA has formalised the requirement for firms to retain records of their covering arrangements for at least five years.

Aggregate net short positions. From 13 July 2026, the FCA will no longer disclose individual net short positions. It will instead publish anonymised aggregate net short positions (ANSPs) by company, combining individual positions reported at or above the 0.2% threshold without identifying individual position holders. ANSPs will be disclosed from 12pm, two working days after the working day to which the positions relate.

Market maker exemption. In response to feedback, the FCA has proposed changes to the market maker regime in PS26/5. The market maker exemption has been changed from an instrument-based to an activity-based exemption, so that market makers will no longer be required to send further notifications to add financial instruments to their exemption. Market makers will instead be required to submit an annual attestation by the first working day of June each year, confirming that they continue to meet the exemption's conditions. Transitional provisions allow market makers to continue using their existing exemptions from 13 July 2026 until the end of the transitional period on 29 January 2027, but they will need to renotify the FCA by 15 January 2027 to continue using the exemption beyond that date. 

Because of this change, the FCA has decided not to proceed with its original proposal to automate the notification process. Notifications will therefore continue to be submitted by email, though the FCA says it will consider ways to make the notification process more efficient in the future.

Emergency powers. The FCA retains its emergency powers to prohibit, restrict and impose additional requirements on short selling in exceptional circumstances. The policy statement includes a Statement of Policy setting out the circumstances in which the FCA may exercise those powers. The FCA says it will only consider exercising these powers in exceptional market conditions.

Implementation timeline

The new regime will be phased in as follows:

• 1 June 2026: Updated Electronic Submission System (ESS) user guide with new position reporting templates.
• 13 July 2026 (Phase 1): New FCA rules come into effect, alongside publication of the first RSL, the first ANSPs, new market maker exemption arrangements, and the Statement of Policy on emergency powers. In response to feedback, market participants will now have three months to implement the new regime, instead of the originally proposed two months.
• 30 September 2026: Updated ESS user guide (ahead of Phase 2 implementation) and a training video explaining how to submit bulk reports, published on the FCA’s short selling notification webpage.
• 30 November 2026 (Phase 2): Updated ESS to enable bulk reporting of multiple notifications in a single submission.
• 29 January 2027: End of the transitional period for market maker exemptions.
• 1 June 2027: First deadline for market makers to submit their annual attestation.

In response to feedback, the FCA has changed the dates so that each new implementation date will now begin on a Monday.

Next steps

Firms engaged in short selling activity should review the final rules and the FCA's operational guide to assess the impact on their operations and prepare for the 13 July 2026 commencement date. Market makers should pay particular attention to the transitional arrangements and the deadline for renotifying the FCA of their existing exemptions. The test RSL published by the FCA provides an opportunity for firms to begin integrating the new data into their systems ahead of go-live.