Watchdog's announcement on CFDs welcomed by industry bodies

The watchdog said a general disclosure regime for long CFD positions would be "the most effective way of addressing concerns in relation to voting rights and corporate influence".

From autumn next year at the latest, all share and CFD holdings in the same company will be added together, with a 3 per cent threshold for disclosure.

Concerns had been raised by trade bodies about investors building large stakes in listed companies through the use of CFDs, as this effectively allowed them to by-pass disclosure rules.

In some cases, this had led to activist investors and arbitrageurs building significant positions in investment companies, potentially allowing them to influence the future of the vehicles.

Daniel Godfrey, director general of the AIC, said enforcing CFD disclosure would help build confidence in standards of practice in the UK.

"We share the FSA’s desire to try and introduce the disclosure regime before September next year if possible and will provide all the support we can to achieve this outcome," he said.

David Bennett, chief executive of Apcims, said: "We are wholly in favour of greater transparency in trading in CFDs so long as there is no detriment to the benefits of the CFD market. It is important that investor confidence remains high and ensuring good governance will undoubtedly contribute to greater stability in the market."

Guy Sears, director of wholesale, at the IMA, added: "By not limiting themselves to positions that directly control votes, the FSA's proposal reduces the chances that ‘creative' investors might avoid the spirit of the new rules."