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EU may end naming conflict

Problems over counterparty disclosure could be resolved with the forthcoming review of the EU prospectus directive, according to NDFA.

Managing director Paul Bispham believes the Committee of European Securities Regulators’ review of the prospectus directive could spell the end of problems for the industry on the issue of counterparty disclosure.

He said: “CESR have announced that they are going to review the prospectus directive which is at the root of this issue so we may be talking about a problem which is going to go away. Everyone wants it to go away but until then, the more clarity we can offer to investors the better.”

In January 2007, the European Commission launched an action programme for reducing administrative burdens in the European Union by 25 per cent by 2012. Within this, the prospectus directive was identified as one area that contains a number of obligations for companies, some of which could possibly be alleviated.

After extensive discussions with key stakeholders, such as CESR and the European Securities Markets Expert Group, the commission has concluded that some elements of the prospectus merit a review. It plans to publish a white paper on retail investment products this spring which will outline any changes considered necessary.

Bispham said: “The implementation into UK law of the prospectus directive through the prospectus regulations has never been tested in the courts and the penalties for breaching those regulations are very onerous and so naturally issuers tend to take an extremely cautious approach and would not wish to be named in brochures in a large number of instances.

“There are a whole range of other considerations when choosing a counterparty and we are not going to offer what we believe to be an inferior product just because a particular issuer allows us to use their name.”

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