(Bloomberg) -- The UK no longer wants hedge funds to publicly reveal their large short positions in company stocks, which the government says risks copycat trades and short squeezes. 

The public register of short positions worth 0.5% or more of any London-listed firm will be replaced by an aggregated list, according to plans set out in a paper Tuesday. It comes after asset managers said in a government survey the current rules “negatively impact the price discovery process.” 

“This will provide the market with greater transparency on the overall net short position in a company’s share than the current regime” without the problems identified in the consultation, the government paper said.

This change “will unleash the benefits of short selling, including enhancing market liquidity, promoting price discovery, and exposing corporate fraud,” said Jillien Flores, head of global government affairs at the Managed Funds Association, which represents hedge funds. 

Funds will need to tell the Financial Conduct Authority privately when their net short positions reach more than 0.2% of a company, up from 0.1% currently. This means the UK will diverge from the European Union standards, in the latest move away from the bloc since Brexit. 

The UK is also working on rolling back an EU law that governs how firms can charge clients for research, relaxing banks’ ring-fenced capital rules, and taking a different path on sustainable finance regulation. 

In a separate paper published Tuesday, the UK proposed the reversal of EU rules on the so-called naked shorting of UK government bonds. The curbs, a response to the European government debt crisis, harm liquidity, the UK said. 

Hedge Funds Shorting Stocks Face More SEC Disclosure Rules

--With assistance from Nishant Kumar.

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