Lenihan targets CFD stakebuilding
Published 08/10/2010 | 05:00
FINANCE Minister Brian Lenihan will publish new rules regulating derivatives within a month, forcing Irish investors to disclose the building of stakes in companies using such instruments.
The new rules will govern so-called contracts for difference (CFD), which enable investors to bet that a share price will rise or fall without owning any of the stock. Investors can agree at a later date to acquire the underlying shares from their CFD providers.
"We expect to have legislation on the matter published within the next four weeks," a spokesman for the Department of Finance said.
Last year, Britain's Financial Services Authority said it would bring forward the introduction of new rules which required long positions which use CFDs to be made public when holdings reach 3pc.
Holders of ordinary shares in Irish companies have to disclose the stake once a 3pc threshold is passed.
The family of billionaire Sean Quinn in July 2008 said it planned to buy 15pc of Anglo Irish Bank after building a stake in the company using CFDs. The Government in January 2009 took over the bank, wiping out shareholders.
In addition, Anglo Irish said in its 2008 annual report that "10 long-standing clients of the bank" had bought shares from CFD providers with a €451m from the lender.
The Financial Regulator said on February 15, 2009 that it was "investigating all aspects of the unwinding of this large CFD position in Anglo Irish shares, including the nature of the loans to a group of investors".