Following its earlier consultation (CP25/29), the FCA has now published PS26/5, confirming the final shape of the UK’s revised short selling regime. As anticipated, the Policy Statement largely cements the proposals outlined in the Consultation Stage. However, it also introduces important operational refinements and clarifications that firms will need to carefully consider ahead of implementation. The reforms sit within the broader framework established by the Short Selling Regulations 2025, marking a transition toward a fully UK-owned regime designed to improve market efficiency while reducing disproportionate compliance burdens. These changes will be relevant to Companies with shares admitted to trading on UK trading venues and their shareholders, law firms, consultants and trade associations with an interest in short selling.
A quick recap: what CP25/29 proposed
As discussed in our earlier analysis of the CP25/29, the FCA’s objectives were clear:
- Reduce transparency that may distort markets
- Lower operational burdens on firms
- Maintain effective regulatory oversight
To achieve this, CP25/29 proposed:
- Removing public disclosure of individual net short positions (NSPs)
- Increasing the reporting threshold to the FCA
- Introducing a new Short Selling Sourcebook
- Simplifying market maker exemption processes
PS26/5: What has Changed
A new dedicated Short Selling Sourcebook will be introduced within the FCA Handbook, largely replicating the existing regime but with targeted enhancements in the following key areas:
- UK sovereign debt and sovereign CDS
- UK sovereign CDS are now explicitly out of scope for position reporting and covering requirements
- Existing market maker exemptions in UK sovereign debt will be removed from 13 July 2026
- However, these instruments remain within scope of the FCA’s emergency intervention powers
This represents a narrowing and simplification of scope, focusing regulatory requirements on areas of greatest market relevance.
- Position reporting
Several important operational changes have been confirmed:
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- Reporting deadline extended to 23:59 on T+1 (previously 15:30 T+1), giving firms additional time for reconciliation and submission
- New guidance on issued share capital, improving consistency in position calculations
- Clarification of group-level reporting arrangements, particularly relevant for firms with complex structures
- Updates to notification templates, supporting more standardised and efficient reporting
- Covering requirements
- Firms are now formally required to retain records of covering arrangements for 5 years
This codifies existing expectations and strengthens auditability and supervisory oversight.
- Reportable shares list
- A new “reportable shares list” will replace the previous exempt shares list
- This list will define which shares admitted to trading on UK venues are subject to the regime
- For issuers with multiple share classes, the FCA will identify the main class of ordinary shares for reporting purposes
The FCA has also provided test versions of the list CSV and XLSX to support implementation readiness.
- Market maker exemption (MME)
The MME regime is being materially simplified:
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- Transition to an activity-based notification model
- Removal of the need to notify the FCA when adding instruments
- Introduction of an annual attestation requirement
Additionally, firms must re-notify existing exemptions during the transition period.
- Aggregate net short positions (ANSPs)
From 13 July 2026, the FCA will publish:
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- Aggregate Net Short Positions (ANSPs) by issuer
- Based on positions reported at or above the 0.2% threshold
- Without identifying individual position holders
This replaces the previous public disclosure regime and reflects a shift toward aggregated, anonymised transparency.
- Emergency powers
The FCA retains the ability to:
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- Restrict or prohibit short selling
- Impose additional requirements in exceptional circumstances
The accompanying Statement of Policy makes clear that these powers will be used only under a high threshold, during periods of significant market stress.
- The headline message from PS26/5 is that the FCA has held firm on its core policy approach.
- Removal of public disclosure – confirmed
- The removal of public disclosure of individual NSPs has been fully implemented.
- Phased implementation timeline
The FCA has adopted a two-phase implementation timeline, with Phase 1 commencing on 13 July 2026, when the new short selling rules come into force, aggregate net short position (ANSP) publication begins, and the reportable shares list is introduced. Phase 2 will follow on 30 November 2026, introducing bulk reporting functionality to allow firms to submit multiple positions in a single upload. This phased approach reflects industry feedback and is intended to give firms additional time to adapt their systems and processes.
Firms will:
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- Continue reporting positions privately to the FCA
- No longer be subject to public disclosure requirements at the individual level
The FCA will instead publish aggregated, anonymised data, marking a clear shift toward a more market-sensitive transparency model.
- Higher reporting threshold – unchanged: The increase in the reporting threshold has been confirmed, reducing the number of positions requiring notification and easing the reporting burden.
- New Handbook structure – proceeding as planned: The creation of a dedicated Short Selling Sourcebook has been implemented broadly as consulted, supporting the transition to a fully UK-owned regime.
- Market maker exemptions – simplification retained: The FCA has proceeded with proposals to streamline the market maker exemption regime, including simplified processes and reduced administrative requirements.
- Certain exemption mechanics
These changes are evolutionary rather than structural, aimed at improving usability.
Where the FCA did not move
The FCA has not revisited some of the more debated proposals. In particular, there is no return to the public disclosure of individual net short positions, confirming a clear shift away from the previous transparency model. Similarly, the FCA has not reversed the increase in reporting thresholds nor undertaken any fundamental redesign of the transparency framework, maintaining the balance struck at consultation stage. This ultimately confirms a strong commitment to a more proportionate and internationally aligned regime, with the FCA prioritising market efficiency while retaining regulatory oversight.
What this means for firms
Firms that prepared early for CP25/29 will be relatively well positioned. However, the changes still require meaningful operational updates, including:
- Updating reporting systems to reflect the new 23:59 T+1 deadline
- Adjusting scope (e.g. removing sovereign CDS from reporting)
- Implementing new data and reporting templates
- Aligning with the private reporting and aggregated disclosure model
Firms should also ensure:
- Robust governance and oversight
- Clear documentation of methodologies
- Strong audit trails and controls
While the extended timeline offers flexibility, the changes remain operationally significant, particularly for firms with complex trading environments.
How Complyport Can Help?
- Short Selling Framework Review and Regulatory Alignment: We support firms in assessing and enhancing their frameworks against PS26/5, identifying gaps and ensuring alignment with FCA expectations.
- Reporting, Data and Operational Readiness: We help design and implement robust reporting processes, including data mapping, NSP calculation validation, and end-to-end reporting frameworks with clear audit trails.
- Governance, Controls and Assurance: We strengthen governance and control frameworks, support policy development, and conduct independent assurance reviews to ensure firms can demonstrate effective oversight.
Contact Us
To discuss how the FCA’s Changes to the Short Selling Regime may impact your business, speak to one of our experts.
Alternatively, explore our Virtual Compliance Assistant: https://vica.chat
