The Federal government plans to force investors to hold equity derivatives to disclose their holdings to the market. Currently no such regulation exists and many observers are concerned that this may create an unfair picture of the market. Traders can hold enormous quantities of options over stock – options are the right, but not the obligation to purchase equities at a future point for an agreed price. This position can create quite a distorted picture of the market, opening up the possibility of market manipulation. This change in regulation comes about at the same time as market regulators look to further regulate short selling of stocks.
