Short Selling Regulation: consultation – sovereign debt and credit default swaps

Following the release of a consultation response paper in connection with the general functioning of the Retained Short Selling Regulation (UK SSR) in view of the preparation of a UK own short selling regime (please see EventID 22144 in this context for more information), the HM Treasury has launched a new consultation in same context.
Specifically, in this consultation the Treasury proposes to exclude entirely from any upcoming short selling regime sovereign debt and credit default swaps (CDS) relating to sovereign debt instruments. This means that there would also be no position monitoring and reporting obligations in relation to such instruments.
The reasoning behind this proposed removal, so the Treasury, is that the restrictions are „an unnecessary part of the regulatory regime“ as inherited from the EU which does not accomplish the goals for which it was designed. In fact, so the regulator, the restrictions as regards short selling activities of UK gilts and related CDS may have a „detrimental impact on liquidity in UK sovereign debt markets“.
However, to enable the Financial Conduct Authority (FCA) to implement emergency measures if the market situation it so requires, the Treasury proposes that the new regime includes corresponding emergency provisions.
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The consultation will run through August 7, 2023.