The Financial Services Authority (FSA), the City watchdog, has extended its crackdown on short-selling following a 30-day review of the new measures.

On September 18, the City watchdog banned short-selling of financial stocks, which was an extension of a previous ban on the practice involving shares of companies undergoing rights issues.

The regulator said today that the new rules would stand, with one exception — companies would no longer be required to disclose their net short positions every day.

From now on, once a short position has been disclosed, no further market announcements will be necessary until the position changes.

Traders were first banned from short-selling after several banking stocks were forced down, shaking confidence in the market just days after Lehman Brothers, the US investment bank, collapsed.

Short-selling, in which investors sell borrowed shares hoping to buy them back at a lower price and pocket the difference, was blamed for sending banks’ share prices plummeting and destabilising the global financial system.

Hector Sants, chief executive of the FSA, said at the time that while the agency regards short-selling as “a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets.

“As a result, we have taken this decisive action, after careful consideration, to protect the fundamental integrity and quality of markets and to guard against further instability in the financial sector.”

The FSA is due to publish a consultation paper on short-selling in January.

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