More disclosure touted to temper pre-hedging ills

Transparency could help investors choose a dealer, but will they use the disclosures?

Pre-hedging disclosure

More detailed disclosure could help investors become more comfortable with dealers’ anticipatory hedging practices, by giving clients more information to help them choose their counterparty.

“Disclosures could shine a light on [these practices], and if the market determines this is bad practice based on that light, there can be a natural shift to change,” says Nihal Patel, a partner at US law firm Fried, Frank, Harris, Shriver & Jacobson. “I do see some benefits in not writing a more prescriptive

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