Financial Conduct Authority
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Contracts for Difference Policy Update

The Financial Services Authority (FSA) yesterday publishes an update on disclosure for contracts for difference (CfDs).

After receiving extensive feedback from a broad spectrum of interested parties on its November 2007 CfDs Consultation Paper, the FSA has decided a general disclosure regime for long CfD positions will be implemented as the most effective way of addressing concerns in relation to voting rights and corporate influence. Existing share and CfD holdings, in the same company, should be aggregated for disclosure purposes. The disclosure threshold will be at 3%, in line with the existing disclosure rules. The FSA will develop an exemption for CfD writers, who act as intermediaries, similar to the Takeover Panel’s Recognised Intermediary exemption to reduce unnecessary disclosures.

The FSA will publish a Policy Statement in September 2008 with a Feedback Statement on the consultation responses, along with draft rules to implement the position described above. Although the position has now been finalised, the FSA will accept technical comments on the rules to ensure the new rules are workable. Final rules will be issued in February 2009.

Alexander Justham, FSA Director of Markets, said:

"Our goal is to provide an effective and proportionate disclosure regime that works for all involved, and sustains market confidence and efficiency. We have received extensive feedback on this issue and we recognise that views differ widely across the market. Taking this into account we have devised a solution that meets the concerns and issues raised. We would like to thank all those who provided feedback"

Notes for editors

  1. The Contracts for Difference Policy Update can be viewed on the FSA website.
  2. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
  3. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.

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