Short-selling shares ban ends today - 16 Jan

How will the stock market react today as the FSA's three month ban on the short-selling of financial shares ends? Could we see a huge drop in the FTSE as bank shares take a pounding? After all the news coming out of Barclays, for one, has hardly been positive this week...


UPDATE:
The FSA have announced that:

"it will extend its disclosure obligation for short selling of stocks in UK financial sector companies until 30 June 2009. The decision follows strong support for the proposals on which the FSA consulted last week.

Disclosure of a net short position in the stock of a UK financial sector company will continue to be required once a position reaches 0.25% of a relevant firm’s issued share capital. However, from 16 January 2009, further disclosure will only be required if a short position changes by a further 0.1% of issued share capital (i.e. at 0.35%, 0.45% etc).

The FSA will allow the ban on short selling stocks in UK financial sector companies to lapse on Friday. These changes will take effect at 00:00:01 on 16 January 2009, permitting short selling of these stocks on Friday.

The FSA plans to issue a further consultation paper with proposals on longer-term options for a short selling regime within a few weeks. "

I wonder what City institutions were strongly supporting the extension of this ban? Maybe the ones I mentioned at the beginning of this article?


So no more ban although the disclosure rules do still apply, albeit in a modified form. I suppose at least now we will be able to see who's shorting. Mind you what will the repercussions be for anyone abusing the short selling system and will disclosure prevent a shorting-attack?

Time will tell.