On July 21, the UK Financial Services Authority (FSA) began a consultation on its proposal to allow financial institutions in receipt of liquidity support from a central bank to delay the public disclosure of such support. This change is designed to address the concern that in the past immediate disclosure has led to a loss of confidence which exacerbated liquidity problems and undermined the firm’s solvency.

Under the EU Market Abuse Directive, which the FSA’s Disclosure and Transparency Rules implement, disclosure of price-sensitive information is required, but the Directive allows disclosure of inside information to be delayed in certain specific circumstances. The FSA proposals do not grant a financial institution an unconditional or indefinite ability to delay disclosure of it receiving liquidity support. Immediate disclosure may still be required in certain circumstances. Accordingly the FSA considers that they comply with the Directive.

The deadline for comments is September 30.

www.fsa.gov.uk/pubs/cp/cp08_13.pdf