Short selling and the development of anti-shorting laws in the UK

Azhar Mohamad (Department of Finance, Kulliyyah of Economics and Management Sciences, International Islamic University Malaysia, Kuala Lampur, Malaysia)

Journal of Financial Regulation and Compliance

ISSN: 1358-1988

Publication date: 8 February 2016

Abstract

Purpose

The aim of this paper is to provide a review of the literature on short selling. In particular, it seeks to describe the history of short selling and anti-shorting laws. With respect to short-selling regulation, the main emphasis will be placed on the UK FSA’s regulatory action.

Design/methodology/approach

This paper reviews the history of short selling and the development of anti-shorting laws, particularly with regard to the UK market. It also analyses the distinct literature on short selling.

Findings

The paper argues that the development of anti-shorting laws shows that regulators are instituting a policy unfavourable to short sellers. The opposers of short selling may be seen as lacking ideas and having the tendency to ban anything they do not like. Short sellers, on the other hand, may be seen as the elite bodyguards of the financial market whose job is to get rid of overvalued stocks, and ultimately keep the market safe and efficient. For this reason, short sellers deserve our praise and thanks, not our hatred and opprobrium.

Originality/value

To the authors’ knowledge, this paper is the first to review the history of short selling and the development of anti-shorting laws, particularly with regard to the UK market.

Keywords

Citation

Mohamad, A. (2016), "Short selling and the development of anti-shorting laws in the UK", Journal of Financial Regulation and Compliance, Vol. 24 No. 1, pp. 9-23. https://doi.org/10.1108/JFRC-05-2014-0025

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2016, Emerald Group Publishing Limited

To read the full version of this content please select one of the options below

You may be able to access this content by logging in via Shibboleth, Open Athens or with your Emerald account.
To rent this content from Deepdyve, please click the button.
If you think you should have access to this content, click the button to contact our support team.