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Study claims plan to expose short-selling is flawed

The EU proposal to force individual fund managers to publicly disclose their net short positions risks distorting financial markets, according to a study by Oliver Wyman.

The report comes as European lawmakers consider changes to the European Commission’s draft short-selling regulations, which propose public disclosure of individual managers’ net short positions above 0.5 per cent of outstanding share capital.

The report, commissioned by the Alternative Investment Management Association and sponsored by Deutsche Bank, says such disclosure requirements result in lower market liquidity and an increased likelihood of short squeezes.

It adds that the overall benefits are negligible in comparison with increases in the cost of capital and the associated negative impact on the real economy.
Oliver Wyman says market transparency on short positions is desirable but can be achieved more effectively by the publication of either aggregated or anonymous short positions.

Aima chief executive Andrew Baker says: “The hedge fund industry supports increasing market transparency through the publication of aggregated short positions. We also supp- ort reporting of positions to national regulators.

“But as the findings of this independent study highlight, there are serious unintended consequences of disclosing individual managers’ posit- ions to the market – a decrease in liquidity, lower returns for end investors, including retail investors, and the likelihood that investments will move to other jurisdictions where returns are not constrained by inappropriate regulations.”

A vote by the European Parliament’s economic and monetary affairs committee on amendments to the commission’s draft regulations is due on February 14.


GAM launch to tap technology trends

GAM is launching a technology fund to take advantage of new trends and “deep distrust” of the sector. The long-only GAM star technology fund will invest in technology stocks worldwide, but particularly in America, where it will hold more than 70 per cent of its portfolio. Mark Hawtin, the manager, ran a technology hedge fund […]

IMA may link absolute return sector with managed sectors

The Investment Management Association says it may look to link the absolute return sector with the managed sector in a bid to categorise the risk level of funds. Speaking at a recent investment seminar, IMA director of markets Jane Lowe said that now the absolute return sector was beginning to mature it was time to […]

Mortgage rates hit six-month high

Average mortgage rates today stand at their highest level in six months, according to says this is because lenders are passing rising funding costs on to borrowers. Swap rates – which are the borrowing rates between lenders – have increased dramatically in recent months. At the end of November, the two-year swap rate […]


London Stock Exchange agrees merger with Canada’s TMX

The London Stock Exchange has agreed to merge with Canada’s TMX Group. The merged group will be co-headquartered in both London and Toronto and will have more than 6,700 companies listed on the combined exchanges with a market capitalisation of £3.7 trillion, the firms said. The LSE’s chief executive Xavier Rolet will head up the […]

The Merchants Trust

Simon Gergel, portfolio manager, The Merchants Trust, Allianz Global Investors, discusses the aim and objective of the fund, what challenges there are in running a concentrated portfolio, where to find the most value in equity markets and how the portfolio is currently positioned.


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