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 sovereign credit default swaps under the Short Selling regime: restrictions, FCA powers, notification thresholds and the 2025 reforms [Archived]

Published by a LexisNexis Financial Services expert

Practice notes

ARCHIVED : This Practice Note has been archived and is no longer maintained.

STOP PRESS: The Short selling Regulations 2025 were made and published on 13 January 2025, together with an explanatory memorandum. These regulations replace the assimilated UK Short Selling Regulation and introduce a new legislative framework governing short selling in the UK, defining designated activities and empowering the Financial Conduct Authority (FCA) to set rules for those activities, alongside powers to act in exceptional circumstances. Certain parts commenced on 14 January 2025, with the remainder starting on the date the revocation of the UK Short Selling Regulation takes effect under FSMA 2023. The UK’s new regime removes obligations on investors when entering short positions in sovereign debt or sovereign credit default swaps (CDS) and the linked reporting requirements, while keeping sovereign debt and sovereign CDS within the FCA’s emergency intervention powers on short selling...

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Web page updated on 22/05/2026

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