Gordon Brown has said there will be new rules governing the practice of short-selling in four months' time, when the temporary ban imposed last week by the Financial Services Authority (FSA) on short-selling financial stocks expires.

The Prime Minister did not give details of what the new rules might be or who might draw them up, but it is expected that the matter will be dealt with by the Treasury, the financial regulator and the London Stock Exchange. Last week's ban has given the authorities a breathing space to consider what needs to be done.

Short-selling is a practice whereby a fund or individual sells borrowed stock in the hope that the price falls and the stock can be bought back more cheaply, so providing a profit. Such action by speculators in recent months has been blamed for some of the sharp falls in the shares of banks and other financial stocks.

Mr Brown told the BBC's Today programme that it was wrong that “good companies” could be brought down by “speculative activities” in the financial markets. “That’s why we take action,” he added.

“Short-selling is something that has existed in the markets for years, but when groups of people are exploiting a difficult economic situation...it is right to stop the short-selling,” he said “We’ll be reviewing over the next four months and I’ll think you find new rules come in for the future.”

In a separate development, Man Group, the hedge fund manager, was reported to have asked the FSA to add its shares to the list of financial groups covered by the four-month ban on short-selling. Man's shares fell 35.5p to 398p yesterday, a dip blamed by some traders on their omission from the FSA's list.

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