UK Short-Selling Rules Overhaul: What Investors Need to Know (FCA CP25/29)

The UK is preparing a major shift in how short selling is regulated. On 28 October 2025, the Financial Conduct Authority (FCA) released CP25/29, a consultation proposing to modernise the UK’s short-selling rules, a regime largely inherited from the EU. The aim is clear: make the UK markets more competitive, more liquid, and easier for institutional investors to operate in.

For traders, investors and listed companies, these changes will reshape how the market interprets short interest and negative sentiment. Here are some of the key themes...

The Biggest Change: No More Naming Short Sellers

Under current rules, anyone holding a short position of 0.5% or above must publicly reveal their identity. These disclosures often drive headlines and spark strong reactions in share prices — especially for mid-cap and high-profile names.

The FCA now plans to replace this with aggregated, anonymised short-interest data. Instead of naming individual funds, the regulator will publish a single number showing the total short interest in each stock (starting from a lower threshold of 0.2%).

This is a fundamental shift. Short sellers get greater privacy. Companies lose visibility. Retail traders receive less granular information. Market sentiment will still be visible — but in a more blended form.

Longer Reporting Deadlines

Reporting deadlines will also be pushed back. Instead of filing short-position reports by 15:30 on the following business day, firms will have until 23:59. This significantly eases operational pressure, especially for global funds running multi-jurisdictional books.

But for the market, it means short-interest data will update later in the cycle, which may create small pockets of uncertainty in fast-moving stocks.

A Clear “Reportable Shares List”

The FCA also plans to introduce a Reportable Shares List, a definitive list of which shares are in scope of the short-selling regime.

This replaces today’s complex exemption structure and should make compliance simpler. Traders will know exactly which UK-listed shares require reporting, and the list will be machine-readable for quants and data teams.

Simplified Market-Maker Exemptions

Market makers, the firms providing liquidity across UK trading venues, will find it easier to secure exemptions, with faster notice periods and simplified approval processes. Better hedging ability typically improves spread quality, meaning retail traders should experience slightly smoother execution in high-volume names.

What This Means for Investors

For institutions, the regime becomes more flexible and less intrusive. Expect more willingness to build short positions in UK names, and potentially more consistent liquidity in both long and short strategies.

For retail investors, one key signal disappears: the identity of the short seller. High short-interest shares will still be identifiable, but without knowing who’s behind the move. This may make sentiment interpretation trickier, and short squeezes more unpredictable.

For UK-listed companies, the loss of identifying data removes a visibility tool but avoids negative press linked to activist short campaigns. Aggregate data still offers a sense of sentiment, just without attribution.

Timeline and What to Watch

The consultation closes in December 2025, with the final rules expected in 2026. Implementation is likely to be phased, beginning with aggregated disclosure and the new Reportable Shares List, followed by updated reporting systems and exemptions.

The earlier traders and investors prepare, the better positioned they’ll be when the new rules go live.

How Signal Markets Will Support You

Signal Markets will cover the implications of CP25/29 in an upcoming webinar, breaking down how the new short-selling regime may change UK equity behaviour, sentiment analysis and trading strategy. If you would like to hear more about the upcoming webinar then please register here