Britain can’t behave like Brussels and expect to trade like Wall Street
The UK’s post-Brexit reform to anonymise short-selling disclosures is a positive step, but it will only succeed if it is accompanied by a fundamental shift from blunt regulation to market-led innovation in data analytics and technology-driven transparency, says Tim Focas
Britain’s post-Brexit financial debate often concludes with a tired binary view that deregulation equals danger, and regulation equals safety. The FCA’s latest move to scrap the public naming of short sellers will likely be met with the usual warnings of less transparency and more risk.
That’s completely the wrong way to look at this. In reality, this is one of the most meaningful reforms the UK has delivered since leaving the EU, but only if it’s followed through properly.
The change itself is pretty straightforward. The FCA will stop publishing the names of investors betting against UK-listed shares once their short position, a bet that a company’s share price will fall, exceeds 0.5 per cent. Instead, it will only publish total, anonymous short interest – just like the US does. The threshold for privately letting the regulator know will rise from 0.1 to 0.2 per cent.
Some will argue that this makes markets even darker and harder for the end investor to see. However, the truth is the old EU rule didn’t create sunlight, it just restricted progress. It didn’t stop manipulation, it only made legitimate investors wary of taking the other side of an overvalued trade. It turned short sellers into headline villains rather than the vital providers of liquidity that vast majority of them are.
The FCA’s shift levels the playing field with the US, where markets have long accepted that investment ideas, not identities, move prices. That really matters. If London is serious about maintaining its place as a leading global financial hub, it cannot cling to disclosure regimes that treat risk-taking as reputational misconduct. Let’s be clear though, deregulation alone won’t deliver sunlit uplands for the City. Without market innovation, this change risks becoming little more than a political gesture.
The next step
If public information is being reduced, private data transparency must rise to meet it. The next phase of market reform has to be placed on the shoulders of market participants to focus on in-depth analytics and trade execution quality — not just looser paperwork. Regulators can dial back disclosure because technology can now dial up market insights. The transparency of tomorrow comes from market participant innovation, not from publishing names on a list.
That’s where the UK’s opportunity lies. We can design a market that’s free. One where financial institutions are liberated to use trading data to show how client orders move, what they cost in real terms, and whether they were executed efficiently. In other words, they replace blunt regulatory disclosure with evidence-based insights. It is about showing not who traded, but how trading behaviour impacts prices and liquidity across the market.
This is the fundamental difference between Brussels and London. The EU’s model is precautionary in the sense it is about constraint first, and innovation later. The UK’s model should be about trusting the information, setting clear standards, and letting market competition prove who trades best.
Aligning with the US approach on short selling is an encouraging start. But the City can’t stop there. To make deregulation work, we need the infrastructure to back it up. Stronger market information and a clear framework for how transparency is redefined in a data-led world.
Done right, this could mark the beginning of a smarter regulatory era. One that, hopefully, encourages capital formation, attracts global funds, and keeps London relevant in a world increasingly dominated by computer driven liquidity. Done badly, it’s just another missed opportunity.
Britain has finally shown it can legislate differently after Brexit. Now it must prove it can think differently too. We can’t regulate like Brussels and expect to trade like Wall Street. If market participants are liberated to complete, if transparency evolves rather than evaporates, then this reform could be exactly the kind of signal London needs to show it’s open for sophisticated financial business once again.
Tim Focas is head of capital markets at Aspectus