The Transparency Directive – what’s new?

With four months to go before the implementation of this new Directive, where have we got to and what does it mean for issuers?

In the UK, the FSA’s consultation feedback statement is expected anytime soon. This will be the outcome of the responses to the consultation held between March and June.

A key aspect is likely to be the timing of the periodic reporting obligations. Technically, the Directive is due for implementation on the 20th January 2007. However, a key debate has been over the date from which its obligations would arise. The Commission in Brussels has been keen to have a January 1st 2007 start date, meaning that companies with a calendar year end would be obliged to apply the new periodic reporting requirements almost immediately.

However with 60+% of UK Plc’s having a calendar year end, the FSA has been keen to push for the January 20th implementation, meaning that those companies would have until 2008 to comply. A Treasury announcement may be expected soon.

In another area, the FSA looks likely to offer a further consultation on the inclusion of contracts for difference as “material interests” for disclosure purposes. This would balance out the situation where under Takeover Panel rules, holdings of CFD’s must be disclosed, but not only the Disclosure Rules.

Meanwhile the European Commission has still not published its “level 2” language, which defines what national regulators have to enforce. This is likely to lead to the FSA rules being introduced as “near final” – allowing the possibility of change if needed. It may also be the reason for the lack of progress made in some European countries, where issuers are still unaware of the likely requirements.