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FSA announces CfD disclosure regime

The FSA will implement a general disclosure regime for long contracts for difference positions, with a 3 per cent disclosure threshold.

Existing share and CfD holdings in the same company should be aggregated for disclosure purposes and the FSA will develop an exemption for CfD writers, who act as intermediaries.

The regulator says after receiving extensive feedback from interested parties on its November 2007 CfDs consultation paper, it has decided a general disclosure regime will be the most effective way of addressing voting rights and corporate influence concerns.

The FSA will publish a policy statement in September 2008 with a feedback statement on the consultation responses, along with draft rules to implement the position described above.

The regulator says it will accept technical comments on the rules to ensure they are workable and final rules will be issued in February 2009.

FSA director of markets Alexander Justham says: “Our goal is to provide an effective and proportionate disclosure regime that works for all involved, and sustains market confidence and efficiency. We have received extensive feedback on this issue and we recognise that views differ widely across the market. Taking this into account we have devised a solution that meets the concerns and issues raised.”

The Association of Investment Companies says it supports the move to broad disclosure of CfDs.

Director general Daniel Godfrey says: “Holders of CfDs have been able to secure stakes and voting powers in companies at arms length without the knowledge of other shareholders and the management of those companies.
“These undisclosed interests are contrary to good governance where managers are fully accountable to their shareholders and investors are able to see who else may have an influence over the company which they own. CfD disclosure will support investor confidence in the quality of UK markets and governance standards.”

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