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U.K. Prohibition on the Short Selling of Financial Stocks

September 24, 2008

By Ronan O'Sullivan and Sergio Weingarten

On September 19, 2008 (the "Implementation Date"), the Financial Services Authority (the "FSA") the competent authority for regulating financial services in the UK, introduced the Short Selling (No. 2) Instrument 2008 which amended the Code of Market Conduct for market participants in the UK (the "Rules"). These Rules immediately prohibited the creation or addition to net short positions in the UK's financial sector companies until midnight on January 16, 2009. In addition to the absolute prohibition, there are also new disclosure requirements that cover short positions which were pre-existing before the Implementation Date.