Advocacy news
willingness to delay implementation of
new measures relating to short selling
disclosures until such time as greater
information is available as to the
approaches that might be taken
SHORT-SELLING response, though well meaning, was elsewhere. The full response to the FSA
CFA UK responded to the FSA’s inappropriate.” can be seen on the society’s site in the
discussion paper DP09/01 on short The results of the member survey advocacy section.
selling in early May. Its response was that supported CFA UK’s response are
based on the results of an April survey shown below. FINANCIAL STATEMENT
that received 347 responses from In addition to asking members to PRESENTATION
members. The response is consistent provide feedback on specifi c questions CFA Institute has been active in
with our previous comments to the FSA raised in the discussion paper, CFA UK promoting recommendations for
on short selling (notably a letter from also asked members to comment on improvements to the presentation of
September 2008) and it takes into whether or not there should be fi nancial statements. In response to an
account recent research on short selling symmetrical disclosure requirements for International Accounting Standards
published by BlackRock, EDHEC and long and short regimes. 24% of Board (IASB) discussion paper in
the Hedge Funds Standards Board. respondents strongly agreed, 40% agreed, October 2008, CFA Institute submitted
In our introductory remarks, the 19% disagreed, 11% strongly disagreed comments calling for:
society stated its belief that: “Covered and 6% had no view. The society’s view • the use of the direct method in cash
short selling plays an important role in remains that symmetrical disclosure fl ow statement presentation;
price discovery and liquidity in the obligations are justifi ed and fair. • the presentation of a statement of
securities markets. The introduction in In our submission we also noted that, fi nancial position reconciliation;
different markets worldwide of as a member society of CFA Institute, • classifi cation across operating,
temporary bans on short selling was a CFA UK is aware of the desirability of investing and fi nancing categories
response to suspected abuse and international co-operation and co- based on managements’ views; and
disorderly markets in fi nancial stocks. ordination to improve market effi ciency • additional improvements to the
With the benefi t of hindsight, it has widely and to reduce costs to market treatment of other comprehensive
become clear that the markets’ actions participants actively investing across income items.
were a logical response to the global markets. We applauded the FSA To support CFA Institute’s response
deteriorating fi nancial position of stocks for its understanding of the need for and in order to represent the views of UK
in the fi nancial sector. The regulatory international co-ordination and for its members, a survey on FSP was sent out
to members in early April and 351
SHORT SELLING REGULATION
replied. The survey asked members to
express a view on the need for a series of
Strongly Strongly No
changes relating to the presentation of
agree Agree Disagree disagree opinion fi nancial statements. The large majority
of members (80% or above in each case)
Individual signifi cant short position 75 145 63 37 25
recognised the need for:
disclosure should be made on a net basis 22% 42% 18% 11% 7%
• enhanced transparency on current cash
A 0.5% threshold would be appropriate for 32 115 90 44 61 fl ow disclosure through the cash fl ow
triggering disclosures under a net short regime 9% 34% 26% 13% 18% statement and notes to the accounts;
• greater visibility of items within Other
There should be symmetry in the disclosure 83 140 64 38 21
Comprehensive Income; and
regime relating to long and short positions, 24% 40% 18% 11% 6%
so that disclosures should be triggered at
• greater disaggregation of unrealised
the same thresholds and both reported gross
gains/losses resulting from fair value
re-measurements.
Market makers should be exempt from disclosure 78 137 58 48 24 To provide the IASB with additional
obligations relating to short selling when acting 23% 40% 17% 14% 7%
guidance on how these objectives might
in the capacity of a market maker
be achieved, a number of respondents
The current disclosure obligation of 0.25% for 21 114 58 32 116
provided the society with additional
rights issues is appropriate 6% 33% 17% 9% 34%
comments on 23 questions. These
comments were then aggregated and
54 SUMMER 2009
54-5554-55 Advocacy.indd 54Advocacy.indd 54 1/6/091/6/09 12:11:5312:11:53Professional Investor Summer 09.56 56 4/6/09 15:41:05
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76