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...

UK short selling: from the assimilated UK Short Selling Regulation to the 2025 Regulations—key requirements and FCA powers

Published by a LexisNexis Financial Services expert

Practice notes

ARCHIVED : This Practice Note has been archived and is not maintained.

STOP PRESS: The short selling Regulations 2025 were made and published on 13 January 2025, accompanied by an explanatory memorandum. The regulations supplant the assimilated UK Short Selling Regulation and set out a new and comprehensive legislative framework governing short selling in the UK, defining specific designated activities applicable to short selling and conferring upon the Financial Conduct Authority powers to make rules for those activities, together with authority to intervene as appropriate in exceptional circumstances. Certain provisions took effect on 14 January 2025, with the remaining provisions then commencing on the day the revocation of the UK Short Selling Regulation takes effect under the Financial Services and Markets Act 2023. For a summary of the background to the new UK regime, see The UK Short Selling Regulation—Review of the UK Short Selling Regulation below...

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Web page updated on 22/05/2026

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