New contracts for difference disclosure regime approved

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LONDON - Following extensive consultation with the industry and to help improve transparency in current market conditions, the UK Financial Services Authority (FSA) has ruled that the new disclosure regime for contracts for difference (CFDs) will take effect from June 1, 2009, rather than as originally intended in September 2009.
Details of the new regime are set out in the FSA Policy Statement on CFDs, which can be found by clicking here.

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. Shares and such financial instruments will have to be aggregated and disclosed once over the 3% threshold. The FSA hopes this will ensure they are not used covertly to influence corporate governance and/or 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, FSA 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."

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• Topics
• Contract for difference (CFD)
• Risk management
• Regulation
• Exchanges