FSA Consultation Paper Focuses On Sec Lending

The UK Financial Services Authority (FSA) has issued a consultation paper setting out proposals on using the new powers granted by the Financial Services Act 2010
By None

The UK Financial Services Authority (FSA) has issued a consultation paper setting out proposals on using the new powers granted by the Financial Services Act 2010.

The Act was given Royal Assent on 8 April 2010, a precursor to becoming an Act of Parliament.

The consultation paper focuses strongly on short selling, stating the Act wold provide the FSA powers to:

– require disclosure of information about short selling and prohibit short selling in specified cases;

– require information or documents to be produced to determine whether short selling rules have been contravened;

– and impose penalties or issue censures in the event a person has contravened short selling rules.

Regarding the disclosures of significant short positions, the FSA is planning to narrow the scope of the companies applicable. The disclosure regime would be restricted to UK companies and companies for whom a UK prescribed market is the main or sole trading venue for their securities.

The consultation paper also includes proposed changes in relation to:- the power to suspend firms or individuals by stopping them undertaking some or all of the activities which they are permitted to carry on for a period of time, and to use this new power in conjunction with other enforcement tools;- the power to impose financial penalties on individuals who have carried out controlled functions without the necessary approval from the FSA;- the ability to gather information in relation to financial stability from both authorised and unauthorised persons to help identify potential threats to the UK financial market;- to enable the Financial Services Compensation Scheme (FSCS) to recoup its management costs, when acting on behalf of other compensation schemes, from FSCS levy payers if it is unable to recoup those costs from the relevant compensation scheme. Another new rule will reflect Treasurys new power to recoup interest costs from the FSCS in the event of it requiring the FSCS to contribute to the costs incurred in applying the stabilisation powers of the Special Resolution Regime established under the Banking Act 2009.

The consultation closes on 25 June 2010.

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