The hedge fund industry has reacted angrily to the UK regulator's emergency measures to ban new short positions in financial stocks or increasing existing shorts, branding it "shooting the messenger" instead of tackling the root problem of a lack of confidence in equity markets.

The Financial Services Authority board, under chief executive Hector Sants, issued a statement last night banning fresh short selling in financial stocks or adding to existing shorts, from today until at least January 16, 2009. The FSA might extend the rules to shares to non-financial companies, and has also imposed additional disclosure rules on existing shorts.