LONDON, March 2 (Reuters) – The global hedge fund industry trade body, the Managed Funds Association (MFA), on Thursday suggested in a letter to Britain’s HM Treasury that it should dispense with how firms must disclose their short positions to the public.
Britain is currently reviewing its short selling regulations.
The MFA letter, shared with Reuters, suggests that when hedge funds short a company, it is disclosed to regulators and not the public. This would prevent a herd-like mentality when a short position of one firm comes out and others then jump onto the position to copy-cat it, the letter said.
This would make hedge funds less “susceptible to short squeezes”, the MFA said in the letter.
A short position is essentially a bet on an asset price moving lower.
U.S. regulators, the letter said, are considering a similar update to its short-selling rules, adopting an “aggregated public disclosure” where short positions are just given to regulators rather than, as currently done in the United Kingdom, on a public website.
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Short sellers are in the spotlight. Allegations made by a U.S. short seller against India’s Adani Group in late January knocked over $100 billion of the market value of seven of the group’s listed firms.
The hedge fund lobby group would also like to see an increase on the threshold of when a shortseller needs to report their position.
Currently it is 0.1% of a company’s shares, but the MFA suggests a hedge fund should need to report their bearish position at 0.2% of issued shares.
Reporting by Nell Mackenzie; editing by Dhara Ranasinghe and Emelia Sithole-Matarise
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