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IMS Asset Management Regulatory Update 2008 - Issue 4, July
Welcome to the fourth issue for 2008 of the regulatory newsletter from IMS Consulting, the largest independent asset management and securities regulatory consultancy in the UK. Our newsletter rounds-up some of the more important recent regulatory changes for asset managers and securities firms, focussing on FSA related developments.
The newsletter is complemented by regulatory briefings on specific topics, which are typically distributed as the issue arises.
This edition’s ‘Regulatory Updates’ section contains articles on changes to disclosure requirements relating to CFDs and short selling of equities relating to rights issues (UK) and financial institutions (US). Financial crime continues to be a high priority regulatory issue in the UK, and our article rounds up recent FSA papers and messages. Further articles deal with two ‘Market Watch’ publications issued by the FSA that deal with controls over insider information (Market Watch 27) and a variety of issues relating to market conduct and transaction reporting (Market Watch 28). We also discuss recent developments on the FSA’s Treating Customers Fairly initiative and the FSA’s discussion on transparency as a regulatory tool.
The ‘Sector Focus’ details AIMA’s intention to publish standards for funds of hedge funds, and the result of the FSA’s review of conflicts at private equity firms.
Our ‘Global Focus’ rounds off the newsletter.
You may have noticed the new look to our website and newsletter, but they are not the only new things here at IMS. Please follow the link on the right of this page for information on our new 'Market Abuse in the UK' training course. Please see the end of the newsletter for further information on the dates and availability of our other training courses.
We hope that you find this newsletter to be relevant and informative. If you have any further questions please contact Scott Wilson, Stephen Burke or Chris Rexworthy. Alternatively telephone 
020 7408 2448 to speak to your usual IMS contact.
Please click here for a PDF of the whole content of this newsletter (printer friendly version).
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Regulatory updates
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FSA update on disclosure for Contracts for Difference (CFDs) The FSA announced in early July 2008 that it would oblige investors whose aggregate stake in a company exceeds 3% to disclose their holding, whether the stake is held via shares or contracts for differences (CFDs). |
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Short selling disclosure – FSA acts to protect rights issues During June, the FSA, in a well publicised move, announced a new disclosure requirement relating to holding short positions of equities during rights issues. Firms were given one week to make arrangements prior to the implementation of the new requirement. In July, the SEC prohibited naked short selling in the shares of certain issuers. |
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Financial Crime Update A round-up of recent developments in financial crime covering data security, anti-money laundering, bogus communications and market abuse issues. |
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Market Watch 27 and the FSA's thematic review of controls over inside information In June 2008, the FSA published ‘Market Watch 27’, which covers the FSA’s thematic review of controls over inside information. It provides an update to Market Watch 21 (July 2007) which reviewed controls over inside information related to public takeovers. This work is of most relevance to corporate finance and private equity firms. |
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Market Watch 28 The FSA published Market Watch 28 in June 2008. This covers a variety of issues including telephone recording, private placing clients, commodities market conduct and transaction reporting. |
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Taking the initiative: the relevance of Treating Customers Fairly Treating Customers Fairly (or “TCF”) is a flagship FSA initiative designed to deliver improved outcomes for retail consumers. The FSA describes TCF as “central to the delivery of its retail regulatory agenda”. While wholesale firms might naturally expect to fall outside the remit of TCF, this is not always the case. Hence it is essential that you consider if it applies to your firm. This short note points the way. |
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FSA opens discussion on transparency as regulatory tool The FSA published a Discussion Paper in May, DP08/3 - Transparency as a Regulatory Tool, which explores the creation of a framework for determining what further information the regulator should publish about firms and the industry sectors to assist in market regulation and achieving the FSA’s desired regulatory outcomes. |
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Sector Focus
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The FSA publishes feedback on its 2007 Conflicts of Interest in Private Equity thematic work Although almost 80% of private equity firms surveyed maintain formal conflict policies and procedures, there is some evidence of an over reliance on the investment process and fund documentation to address potential conflicts of interest and a lack of sufficient formalised conflict training. |
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AIMA to publish standards for funds of hedge funds The Alternative Investment Management Association (AIMA) intends publishing a set of standards for funds of hedge funds (FOHF). |
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Global Focus
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SEC prohibits naked short selling in the shares of certain issuers On 15 July 2008, the U.S. Securities and Exchange Commission published an emergency order preventing market participants from ‘naked’ short selling of securities in a number of financial institutions. This order has been issued with the express intention of protecting investors, maintaining orderly markets, and promoting capital formation in the current economic climate. |
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Round up A round-up of relevant and interesting issues from around the globe. |
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Training
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Training dates and avaliability If you are interested in attending any of our training courses, Compliance for Hedge Funds/Private Equity or Market Abuse in the UK, then please click on the link below for dates and further information. |
