Progress being made on identifying CFD holders?

It looks as though – finally – there is some progress on requiring disclosure on cash settled derivatives, such as CFD’s. These instruments – beloved of hedge fund managers and others wishing to short a stock – cause major difficulties for investor relations professionals. The rules across the EU and further afield do not require investors holding derivatives to disclose their ownership, except in takeover situations. With up to 30 or even 40% of a company’s stock being held through CFD’s,

Now however some hope can held out. First, the Committee of European Securities Regulators has launched a consultation in which it proposes ….”CESR could examine, when advising the European Commission on possible implementing measures of the TD, …Application of the notification of holdings regime to stock lending and to derivative products.” The consultation closes on September 14th, and we will be responding.

Next, the Italian regulators announced its implementation of the Transparency Directive. The announcement included .. “The bill also tightens disclosure rules on shareholdings, with investors having to declare underlying stakes held through derivatives.”

And lastly, the FSA is coming closer to a decision on its approach on CFD’s and derivatives. A representative of Capital Precision will be meeting with the FSA shortly to get an insight into their ideas. Obviously, we will keep you posted.

So, progress on various fronts this last couple of weeks. Now all we need is for US regulators to adopt a Section 793 approach….