The Financial Conduct Authority’s new short-selling disclosure system has drawn scrutiny after apparent errors were identified in its first batch of published data.
The Financial Times first reported that the regulator’s new disclosures contained a series of apparent errors, including positions that were changed or removed without explanation, duplicate entries, and years-old bets unlikely to still be active.
Analysis by data provider Breakout Point, reviewed and confirmed by the FT, found short positions against FTSE 250 software company Softcat appeared in Monday’s report before disappearing from Tuesday’s update without being listed as closed.
The updated report also showed different dates and position sizes for four companies, including student accommodation provider Unite Group, without recording that the figures had changed.
A person familiar with the matter told the FT one amendment was made after a short position had been duplicated, suggesting at least some errors stemmed from data submission problems rather than systemic failures.
The issues emerged after the FCA overhauled how it publishes short-selling data, moving away from naming individual hedge funds to instead reporting total short interest in each stock once it reaches 0.2 per cent of a company’s shares.
Chris Brennan, a partner at law firm Dentons, said market participants relied on the disclosures to monitor trading activity and identify potential misconduct.
“The information that flows into the FCA is essential for market oversight and to identify misconduct,” he said. “Market users have a reasonable expectation that what they see published is correct.”
Breakout Point founder Ivan Cosovic added: “Early-days issues are perhaps forgivable and things are already improving, but invisible corrections in an official market record should not become a habit.”
The FT also reported that some short positions disclosed under the previous reporting regime appeared to have been omitted from the new data entirely.
Others dating back more than five years remained listed despite appearing unlikely to still be active, raising further concerns about the reliability of the published records.
One example cited was a short position in miner Critical Mineral Resources first disclosed in 2021, which remained visible in the new data set.
The company’s shares have fallen 87 per cent since that initial disclosure, a move that would typically allow a short seller to close its position and lock in a profit.
The FCA told the FT it had reviewed the examples highlighted by Breakout Point and concluded there was “no need for any revisions” to the published data.
The disclosures rely on information submitted by investors, and the FCA contacts firms where necessary to check whether older positions remain valid.
The watchdog faced a notably active period beyond the short-selling controversy, having also called for wider powers to regulate artificial intelligence and warning that the UK’s financial rulebook must keep pace with rapid technological change.
For traders and compliance professionals, confidence in the accuracy of short-selling data is considered fundamental to effective market oversight and the detection of potential abuse.
The FCA has been approached for comment on the specific errors identified and whether further review of the published dataset is planned.