The Financial Services Authority has announced that following extensive consultation and to help improve transparency in current market conditions, the new disclosure regime for contracts
The Financial Services Authority has announced that following extensive consultation and to help improve transparency in current market conditions, the new disclosure regime for contracts for difference will now take effect from June 1, instead of September 1 as originally planned.
Details of the new regime are set out in a policy statement on CfDs published by the UK regulator. The new rules cover financial instruments in the same company, which give a legal right to acquire shares or have a similar economic effect to shares.
CfDs and similar financial instruments will have to be aggregated along with shares and disclosed once over the threshold of 3 per cent. According to the FSA, this will ensure that they are not used covertly to influence corporate governance or to build up stakes in companies.
An exemption has also been put in place for CfD writers acting in a client-serving capacity, to prevent unnecessary disclosures to the market.
‘This is a very significant step in improving market transparency and we have brought the implementation date forward to reflect that,’ says Alexander Justham, the FSA’s director of markets. ‘The new rules will resolve some of the concerns raised about the risks of market players devising ways to avoid disclosure or over-disclosing.’
Last October the FSA published a feedback statement setting out the general disclosure regime for the disclosure of CfDs and other financial instruments with similar economic effect as a qualifying financial instrument.