More disclosure touted to temper pre-hedging ills
Transparency could help investors choose a dealer, but will they use the disclosures?
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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