Jurisdiction(s):
United Kingdom

Key definition

Short selling definition

What does Short selling mean? Short selling is the practice of selling securities the seller does not own, aiming to buy them back later at a lower price. In practice this involves borrowing the securities (or having a firm locate) to settle the sale, then closing the position by purchasing the securities to return to the lender. It is used for hedging, liquidity and price discovery, and can feature in contingent asset strategies. Economic short exposure can also be created synthetically using derivatives (for example, CFDs, swaps or options). The activity is regulated rather than purely descriptive. In the UK, the onshored Short Selling Regulation (UK...

Short selling in the UK: overview, market practice and the 2025 regime replacing the UK SSR, including FCA powers, reporting thresholds and ANSP disclosures

Published by a LexisNexis Financial Services expert

Practice notes

STOP PRESS:

The Short selling Regulations 2025 were finalised and released on 13 January 2025, accompanied by an explanatory memorandum. They replace the assimilated UK Short Selling Regulation and introduce a new statutory framework for regulating short selling in the UK, defining designated activities and granting the Financial Conduct Authority (FCA) powers to make rules for those activities, as well as to intervene in exceptional circumstances.

Certain elements took effect on 14 January 2025, with the remainder commencing on the date the UK Short Selling Regulation is revoked under the Financial Services and Markets Act 2023.

In October 2025, the FCA published CP25/29, outlining proposals for a new Short Selling sourcebook and changes concerning, among other matters:

position reporting
covering arrangements
lists of reportable Shares
market maker exemptions
disclosures of aggregated net short positions (ANSPs)

The FCA also issued a derivations and changes table explaining how rules and guidance have been migrated from the UK SSR (including related delegated regulations, technical standards, ESMA guidelines and Q&As) into the new Short Selling sourcebook. Responses were required by 16 December 2025...

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Web page updated on 21/05/2026

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