Equity derivatives: London turns its attention to CFDs

FSA gets mixed response to proposals on disclosure while LSE plans to trade the instruments on its orderbook.

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.

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