Exemptions from short-selling requirements

Exemptions under the UK SSR

Certain activities may be exempt from position reporting and covering requirements, where specified conditions are met:

Stabilisation activity

Short selling carried out as part of stabilisation activity may be exempt from position reporting and covering requirements, subject to SSR 5.3.

Firms must ensure that the activity meets the definition and conditions for stabilisation.

Market maker exemption (MME)

The market maker exemption allows firms undertaking market making activities to be exempt from reporting and covering requirements for shares reportable under SSR.

The exemption is covered in SSR 5.

The exemption operates on an activity basis, rather than by individual financial instrument. Firms may only rely on the exemption when carrying out qualifying market making activity and must not use it for other activities (for example, proprietary trading).

List of market makers

We publish a list of market makers who are using the exemption when undertaking market-making activities in financial instruments reportable under SSR.

This list is updated regularly as new firms notify us of the use of the exemption.

Eligibility for MME

To rely on the exemption, your firm must meet the conditions in SSR 5 including that you:

• Are an investment firm, credit institution, or equivalent overseas entity.
• Are a member of a UK trading venue or equivalent overseas trading venue.
• Carry out market making activities on a regular and ongoing basis, in accordance with SSR 5.13–5.19.

Apply for MME

You must submit a notification to the FCA before using the exemption (SSR 5.5).

To apply, you must:

• Complete the MME notification form.
• Confirm you meet all relevant conditions.
• Submit the notification at least 15 calendar days before relying on the exemption.

Notifications must be submitted by email to: [email protected].

This mailbox should be used for all MME communications including initial notifications and re notifications, removing exemptions. annual attestations, updates to contact details or change in circumstances and general queries.

FCA review and use of MME

We will assess whether the notification is complete and demonstrates that the conditions for the exemption are met.

Once satisfied, we’ll provide a non objection within 15 calendar days of receiving a complete notification (see SSR 5.5).

If not satisfied, we may request further information (see SSR 5.11.2) or tell you we’re minded to prevent use of the exemption.

Ongoing requirements

Under the MME, your firm must:

• Continue to meet all conditions.
• Maintain adequate records (SSR 5.10).
• Provide information when requested. This may include information to demonstrate that your firm continues to meet the conditions for using the exemption, or information requested where we identify potential issues with your use of the exemption or short selling activity through our market monitoring (SSR 5.11).
• Tell us as soon as practicable of any change in circumstances, to update contact details, or to remove exemptions (SSR 5.7)

Annual attestation

You must submit an annual attestation form to [email protected] confirming your firm meets the conditions of the exemption. The attestation must be signed by a senior person responsible for the entity’s regulatory obligations in relation to short selling for its market-making activities. You must submit it by the first working day of June each year (SSR 5.6).

If you do not submit your attestation on time, we will contact you to remind you of the requirement and warn that we may remove your exemption. Following that warning, continued non-submission may be treated as an indication that your firm may no longer qualify for the exemption, and we may take action to prohibit the use of the exemption (SSR 5.6–5.9).

Waivers and modifications

Under SSR 7, we may grant a waiver or modification of the short selling rules in exceptional circumstances as follows:

SSR waivers

This is covered in SSR 7.

We may grant a waiver in exceptional circumstances, including if your firm is unable to comply with a rule due to a serious systems issue affecting your ability to calculate or notify us of your net short positions.

A waiver under SSR 7:

• May be subject to conditions or requirements.
• Does not apply retrospectively.
• May be revoked or varied by the FCA.

FSMA waivers

This is covered in section 138A FSMA.

You may also apply for a waiver under section 138A FSMA, where:

• Compliance with a rule is unduly burdensome.
• The rule does not achieve its intended purpose.

Your application must satisfy the statutory tests in section 138A FSMA.

Applying for a waiver

To apply for a waiver, you must:

• Submit a request to the FCA setting out: 
  • The type of waiver requested (SSR or FSMA).
  • The rules to which the request relates.
• A clear explanation of: 
  • The circumstances giving rise to the request.
  • Why the dispensation, modification or reimposition is required.

You must include all relevant supporting information and evidence, including any information necessary for us to assess the request.

Submission process

Waiver requests should be sent to [email protected], with the subject line: 'SSR waiver request – [type of waiver] – [name of position holder]'

FCA consideration 

When assessing a waiver application, we’ll consider whether the relevant statutory and rule-based conditions are met.

We may:

• Grant the waiver, with or without conditions.
• Request further information before making a decision.
• Refuse the application, where the conditions are not met.

Publication

Where a waiver is granted, we may publish details of the waiver in line with SSR 7, subject to confidentiality considerations.

For waivers granted under section 138A FSMA, we will comply with the relevant statutory publication requirements.

For further queries, contact: [email protected].