Against Mandatory Disclosure of Economic-only Positions Referenced to Shares of European Issuers – Twenty Arguments against the CESR Proposal

Abstract

Following recent developments in some European jurisdictions, the Committee of European Securities Regulators (CESR) proposed, on 9 February 2010, ‘to extend major shareholding notifications to instruments of similar economic effect to holding shares and entitlements to acquire shares’. This initiative pushes for mandatory Economic-only Disclosure of Major Shareholdings in Europe (EOD). By providing twenty arguments against the CESR proposal, this paper seeks to spur a lively discussion as to whether mandatory EOD is desirable. It puts forward that European institutions are well advised to refrain from implementing the CESR proposal in its current form. If at all, implementing a requirement to report to regulators (Economic- only Reporting – EOR) and limiting EOD to very large positions serves social welfare better than EOD and avoids major differences between European securities law and US securities regulation.