The London Stock Exchange and CrestCo, which operates the UK's clearing and settlement system, are t...
The London Stock Exchange and CrestCo, which operates the UK's clearing and settlement system, are to publish lists of companies whose stock is excessively shorted in order to warn investors about potential liquidity traps, the FSA says today.
Monthly lists of stock lending data involving FTSE 350 companies will start appearing this summer, and the LSE will also be working to develop a system that can warn investors if certain companies are effected by settlement delays caused by problems sourcing shares needed to close short selling deals.
The FSA says that warning consumers about illiquid securities will be of direct benefit, but it also says that the data provided will not be "a perfect proxy for short selling".
The regulator's announcement is also likely to satisfy those insurance companies that last year complained about short selling affecting the value of assets supporting pension and with profits funds.
Short selling helped magnify the effects of falling stock markets, but with most insurers having significantly reduced their exposure to equities in the past 12 months, it looks like another case of the FSA closing the barn door after the horse has bolted.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress