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Letter Summary:
As a general comment, the CAC is supportive of regulatory measures designed to provide additional information and increase transparency in the capital markets. We also support the global harmonization of regulations across major markets and jurisdictions. That said, we feel that changes to disclosure requirements should be made within an efficient framework that balances increased reporting burdens against the usefulness of additional information to market participants, and should provide clear guidelines for participants to follow.
Overview of the Council’s Comments:
The Proposed Amendments could lead to potentially confusing over-reporting that might reduce transparency. If global market participants are required to disclose on the basis of synthetic positions, it is possible that the total number of securities “owned” may significantly exceed the number of outstanding securities. Persons who rely on early warning reports for information will then be required to decide which of those persons reporting may be able to exercise control, and which persons have only an economic interest, which could be complicated for an investor to decipher, even with explanations in the report.