FACTBOX-How FSA will enforce short-selling ban

LONDON (Reuters) - The Financial Services Authority has slapped a three-month ban on short-selling financial stocks in an effort to limit recent sharp share price falls across the sector.

Here is a summary of how the FSA intends to enforce the ban, which applies both to short-selling and naked short-selling.

DISCLOSURE RULES

Investors are allowed to maintain or reduce an existing short position while the ban is in force, but they are not permitted actively to increase their short interest.

The FSA plans to ensure compliance by obliging investors with an existing short position above 0.25 percent of a financial company's share capital to declare the size of their holding every day.

FSA officials will be scrutinising stock exchange announcements every day to make sure investors are observing the rules.

MARKET MONITORING

The FSA has a 40-strong market monitoring team which observes share price movements every day for signs of potential market abuse. This team will now take on responsibility for identifying possible short trades.

The market monitoring team also has access to full details of every equity trade done in the UK market, including the identity of buyers and sellers and transaction prices.