FSA Publishes Statement On Transparency Directive Implementation

by Robin Pilgrim, LawAndTax-News.com, London

30 October 2006

The UK's Financial Services Authority (FSA) on Friday published a policy statement setting out the near-final rules for the implementation of the Transparency Directive, and outlining plans for further work on the disclosure of contracts for difference (CFD) positions.

According to the statement, under the new Directive rules the FSA will make the following changes:

• Periodic Financial Reporting - implement the Directive requirements on annual and half-yearly financial reports; provide further informal guidance on what it believes does not have to be disclosed in interim management statements and retain the existing Listing Rule requirement for wholesale debt issuers to produce annual reports, as well as a number of other detailed rules on financial reporting which it had been suggested be removed e.g. requiring annual accounts to contain statements of directors' interests.
• Major Shareholding Notification - retain the current notification threshold of a 3% holding, and every 1% thereafter, and continue to apply the regime to a wider range of issuers than the Directive requires i.e. issuers on all regulated and prescribed markets - including AIM and PLUS Markets (formerly OFEX).

Hector Sants, FSA Managing Director of Wholesale Business, stated that:

"The market has supported our proposed approach to implementing the Transparency Directive. We note that it has also opted to retain certain features of the existing UK regime that go beyond the directive requirements, notably in the area of major shareholding notifications."

"There was no consensus on whether introducing rules requiring disclosure of CFDs would bring benefits, so we will undertake further analysis before reaching any final decision."

"We plan to implement a more principles-based approach to the listing rules for investment entities following the welcome by the industry for our proposals. However, in the light of feedback and recent market developments, we will be revising a number of aspects including the prohibition on investment companies taking controlling stakes in the companies in which they invest and keeping our directive minimum listing regime open to overseas investment companies – a route which we think might be attractive for private equity funds."

He concluded:

"We hope these measures will help London to maintain its position as the prime centre for raising capital in Europe."

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