http://www.telegraph.co.uk/money/mai...

FSA clamps down on short selling investors

The Financial Services Authority is to force hedge funds and other investors to disclose "short positions" during a rights issue.

Troubled Halifax owner HBOS has been targeted in recent weeks by short sellers

The unprecedented move - which the FSA plans to implement in just seven days - was widely criticised by traders, although shares in banks and other companies currently in the middle of fundraisings rose sharply.

Troubled Halifax owner HBOS, which is hoping to raise £4bn from investors, closed up 14pc, while Johnston Press rose 20pc. Both companies have been targeted in recent weeks by short sellers - traders who sell shares they do not own in the belief they can buy them back cheaper at a later date. Earlier this week, HBOS shares fell below the rights issue price amid claims of a "bear raid".

Under the new rules, traders who have short sold the equivalent of more than 0.25pc of a company's shares will be forced to publicly disclose their positions. The FSA plans to implement the changes by Friday. Under current rules, investors are required to disclose stakes if they exceed 3pc. Short sellers currently only have to disclose significant stakes during a takeover bid.