The UK Financial Services Authority’s proposals to increase disclosure of positions in contracts for difference has so far met with a mixed response.
On the back of concerns that some market players, namely hedge funds, are using CFDs to secretly build up substantial positions in companies, the regulator issued a consultation paper in November in which it proposed two possible frameworks for increasing CFD disclosure. CFDs are a type of equity derivative, which means they fall outside normal equity market disclosure rules. The FSA invited the industry to give feedback on its two proposals by February 12.
One option would involve the introduction of a general disclosure regime that would require CFD holders to reveal all economic interests of 5% or more in any company’s shares. The alternative proposal is more targeted; it would require disclosure of any CFDs written in reference to 3% or more of total...
