Net short position

A holder's short exposure to a company minus their long exposure, expressed as a percentage of the company's issued share capital.

Regulators in the UK and EU define a position as net: every economic exposure that gains from a fall in the share price (shares sold short, derivatives such as put options and contracts for difference) minus every exposure that gains from a rise. A hedge fund that is short 2% of a company through a swap but owns 0.5% of its shares has a net short position of 1.5%.

Disclosure obligations bite on this net figure. It is why a firm can appear on a named register with a small position while running a much larger gross short book hedged elsewhere, and why the published percentages are a description of net economic positioning rather than of shares physically sold.

Related terms

Disclosure threshold: The size a position must reach before it becomes publicly visible: 0.2% of capital in the UK aggregate, 0.5% named in EU markets, close to everything in Australia.

Gross vs net short position: Gross is every short exposure added up; net subtracts long exposure in the same company. Disclosure regimes report net.

Named register: The EU-style publication model: each individual net short position of 0.5% or more of share capital is published with the position holder's name.