The Financial Services Authority (FSA) is considering forcing investors to disclose short positions in all 3,489 shares traded on UK exchanges despite dropping a ban on short-selling of financial stocks this week.

The regulator asked brokers and investors to respond to the possible extension of the rules in an email sent yesterday. A formal consultation will start later this month.

The FSA said that extending the requirements was one of several options being considered and that nothing had been decided.

The email said the regulator is considering introducing a requirement that “significant” short positions in all UK shares would need to be disclosed.

The email, sent by Don Groves, an associate in the FSA’s market conduct division, is likely to provoke a fierce response from hedge funds that are loath to disclose details of their trading positions.

The consultation comes just two days after the FSA reversed a controversial ban on short-selling of all financial shares that was introduced in response to the near collapse of HBOS and other financial institutions late last year.

Although the ban on shorting financial shares was lifted, the FSA retained the requirement that short positions in the 34 shares must be declared if they are equal to more than 0.25 per cent of the company’s outstanding share capital.

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