A European Commission proposal requiring hedge fund managers to increase public disclosure of short selling activity will affect liquidity, as per a study conducted by the Alternative Investment Management Association (AIMA), Financial Times reports. The proposal may also widen bid-ask spreads on European shares.

The proposed regulations will require short-sellers to publish the details of any position they take amounting to over 0.5% of a company’s outstanding shares. The European Parliament’s Economic and Monetary Affairs Committee is expected to vote on possible amendments to the commission’s original draft regulations on Feb. 14, 2011, adds Fundamentals.

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