The UK's top financial regulator said today that it is considering imposing sweeping measures to restrict the practice of short-selling during rights issues in order to reduce market volatility and crack down on potential "abuse".
The Financial Services Authority said that it was immediately moving to reduce the "severe volatility" in the shares of companies undertaking rights issues by requiring short sellers of the shares from June 20 to disclose their position when it amounts to 0.25pc or more of the outstanding stock.
That way, according to the FSA, there will be greater transparency over why the share price might be so volatile, limiting potential panic among other investors and preventing the creation of false impression of what the demand for those shares actually is.
# Comment: FSA crackdown is clueless
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