Almost half of the disclosures made since the rules came into force last month have contained errors, been submitted late or were not required at all.
According to analysis by the Financial Times, 20 of the 41 disclosures were incorrect and hedge funds are struggling with the complex calculations involved.
The new provisions in the FSA’s Code of Market Conduct came into effect on 20 June and require significant short positions in stocks undertaking rights issues to be disclosed.
Last week the FSA took disclosure one step further with the announcement of a general disclosure regime for long contracts for difference positions, with a 3 per cent disclosure threshold.
The regulator says existing share and CfD holdings in the same company should be aggregated for disclosure purposes. It says it will develop an exemption for CfD writers who act as intermediaries.
The regime is set to be introduced in September.
The regulator says a general disclosure regime will be the most effective way of addressing voting rights and corporate influence concerns.
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.”
And off the back of the failure of the majority of firms to meet the March TCF deadline, the new chairman of the FSA Adair Turner has pledged to scrutinise how effective the initiative has been.
In an oral evidence session with the Treasury Select Committee on his appointment, Lord Turner revealed that assessing how effective the TCF regime has been will be one of his priorities.
He said: “I think there are debates within the retail industry about how effective that Treating Customers Fairly initiative has been and that is something that I want to really look in detail at and try and make sure that I am happy with the approach we are using for the sector of the market.”
Only 13 per cent of relationship-managed firms met the TCF deadline and Aifa is calling on the regulator to clarify what it wants from firms.
Chris Cummings says: “What does that say about TCF as a regulatory initiative? The FSA has not been clear about what it’s looking for from firms.”