Key facts
- The Financial Conduct Authority's (FCA) new short-selling data has revealed apparent errors.
- These errors include positions changed or removed without explanation, duplicate entries, and old bets.
- Data provider Breakout Point identified issues with short positions against companies like Softcat and Unite Group.
- Market participants rely on these disclosures for monitoring trading activity and identifying misconduct.
- The FCA stated it reviewed the highlighted examples and found no need for revisions to the published data.
Apparent errors in the Financial Conduct Authority's (FCA) first batch of new short-selling data have raised questions over the accuracy of information used by traders and regulators to track bets against UK-listed companies. The Financial Times 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 some years-old bets that are unlikely to still be active.
Analysis by data provider Breakout Point found short positions against FTSE 250 software company Softcat appeared in one day’s report before disappearing from the next day’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. One amendment was reportedly made after a short position had been duplicated.
The issues arise after the FCA overhauled how it publishes short-selling data. Instead of naming individual hedge funds betting against companies, the watchdog now reports the total level of 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, stated that market participants rely on these disclosures to monitor trading activity and identify potential misconduct, expecting the published information to be correct. Ivan Cosovic, Breakout Point founder, added that while early-day issues are forgivable, invisible corrections in an official market record should not become a habit.
The FT also reported that some short positions disclosed under the previous regime appeared to have been omitted from the new data, while others dating back more than five years remained listed despite appearing unlikely to still be active. 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. It has been reported that the disclosures rely on information submitted by investors, and the FCA contacts firms where necessary to check whether older positions remain valid.