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FSA needs to add identity clarity

Morgan Stanley has called on the FSA to provide solid guidance on the EU prospectus directive rules and the legal consequences of disclosing the identity of counterparties to advisers.

At a Money Marketing structured products round table, executive director of UK structured solutions Marc Chamberlain said the failure of Lehman Brothers has prompted advisers to put pressure on providers to disclose the name of the underlying issuer but he said more clarity was required from the FSA on whether they could do so legally.

He said: “We went down a very conservative route and were not comfortable speaking about the counterparty but the demand from advisers was there straight after Lehmans.

“The FSA has intimated that the risk of not naming is actually outweighing the risk of naming and causing a public offer. We would like some clarity. It is fine to say, I do not see why people are not naming the counterparty, but tell me how we can get round the fact that outside counsel are suggesting that, in doing so, we are creating an illegal public offer.”

Blue Sky Asset Management product development director Mark Dickson said: “There is a difference between letting advisers know who the counterparty is and putting it into your marketing literature. For independent providers, I do not think there is any excuse for not letting advisers know who the counterparty is.”

Quantum Asset Management chief executive Mark Mathias said: “If regulation changes at CESR level and it is all clear on paper that will be helpful but I do not think we need any immediate dispensation from the FSA to allow us to act possibly in contravention of the prospective directive, which I do not think they could do anyway.”

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