Endoxa bank consortium tries to make sense of position-reporting rules
Building a consensus approach that avoids a steady stream of small fines for misreporting long and short stock positions may be a new model for joint action on regulation.
On Monday, news emerged that a consortium of Barclays, BNP Paribas, Goldman Sachs, HSBC and another unnamed bank were collaborating to develop a new position-reporting utility.
The banks, whose consortium is called Endoxa, from the Greek for “shared opinions”, first came together five years ago with the idea of establishing common best practice to meeting the complex and varied requirements over disclosing to regulators long and short positions in public company securities, principally equities.
Different financial centres have different shareholder reporting rules, with varying threshold percentages at which sell-side and buy-side firms must disclose long and short positions, different guidelines over what exposures count towards those thresholds, as well as distinct interpretations on whether offsetting positions can be netted, on exemptions for market-making inventory that is accumulated purely to enable client business, and on disclosure of beneficial ownership.
There are over 100 different regulatory jurisdictions, of which approximately 25 account for most of the volume
These questions get particularly vexed in takeover situations and in periods of market stress, when regulators might impose shortselling restrictions on stock of companies in sensitive sectors such as banks, technology or energy.