UK Slaps Ban on Short-Selling Financial Stocks

The UK Financial Services Authority imposed a temporary ban on short-selling financial stocks on Thursday, saying the measure was needed to prevent further instability in the financial sector.
The ban, which takes effect from midnight on Thursday Sept. 18, follows hours after UK bank Lloyds TSB bought rival HBOS following a dramatic fall in the latter's share price.
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"We have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector," FSA Chief Executive Hector Sants said in a statement.
The move came after the U.S. Securities and Exchange Commission on Wednesday introduced rules under which short sellers and their broker-dealers must deliver securities by the close of business on the settlement date, three days after the sale.
Chancellor of the Exchequer Alistair Darling welcomed the FSA ban.
"I believe it is the right thing to do in the current market conditions and in the interests of financial stability," he said in a statement.
The FSA said the ban will remain in force until Jan. 16 next year and will be subject to an initial review after thirty days.
In addition, investors with an existing short position of more than 0.25 percent of a financial company's share capital must disclose their holdings every day from Sept. 23, the FSA said.