FSA to target covert stake-building
Hedge funds will no longer be able to build secret stakes in companies after the UK’s market regulator announced it would introduce unexpectedly strict rules on the disclosure of derivatives. The FSA said big holdings through contracts for difference - which give investors financial exposure to share price moves but no voting rights - should be disclosed as if they were shares. The move comes after a series of cases in which activist hedge funds and companies planning to bid for rivals have used CFDs to secretly build holdings, and follows the introduction of rules requiring short-sellers to declare bets against the shares of companies involved in rights issues. It goes further than previous proposals to require only minimal disclosure of CFDs.
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