The FSA is to convene a roundtable discussion in September on the perceived problems short selling ...
The FSA is to convene a roundtable discussion in September on the perceived problems short selling is causing in the markets.
Howard Davies, chairman of the FSA, said the regulator sees short selling as a useful underpinning of market liquidity, but sees a case for greater disclosure relating to short positions and will bring forward proposals in the autumn.
He said: 'The sharpest critics of this practice argue that it facilitates 'bear raids' on stocks and thus contributes to downward pressures on equity prices, exaggerating market declines, or falls in particular stocks. Some would therefore like it banned outright. The most recent suggestion is for a type of Tobin tax on short sales.'
A Tobin tax refers to a small tax on foreign exchange transactions, originally proposed by the economist James Tobin to discourage speculative trading.
Hard and fast information about the volume of short selling in the UK is not available, however Crest, the securities settlement system, has provided the FSA with statistics about the volume of stock lending in the market. These figures show that levels of stock lending recently, when the markets have been falling fast, have not increased significantly compared to earlier in the year.