Updated UK Rules on Short Positions in Certain Derivatives

In June of this year, the UK Financial Services Authority (FSA) amended its Code of Market Conduct to require holders to disclose short positions of 0.25% or more of an issuer’s share capital where the issuer’s securities are listed on an exchange (except AIM) and where the issuer is undertaking a rights issue. In addition, in July, the FSA released the result of a study on current disclosure of derivative holdings, concluding that certain derivative long positions must be reported at a 3% holding. Final rules are expected early in 2009.

A few highlights on the UK rules:

-- 3% holdings in voting rights must be disclosed;

-- transactions in securities, where the issuer is under a takeover offer, by any person who holds gross long derivatives on 1% of those securities must be disclosed;

-- open net short positions of 0.25% or more of a listed company (excluding AIM-listed companies) which is undertaking a rights issue must be disclosed.