On 26 June 2009, the FSA announced that it had extended indefinitely the current disclosure regime for significant net short positions in the stocks of UK financial sector companies which was due to expire on 30 June 2009.

As was previously the case, disclosures are needed if a net short position exceeds 0.25% of the company's issued share capital or increases by 0.1% bands above that (the net short position reaches 0.35%, 0.45% and so on).

In the policy statement that accompanied the announcement (Policy Statement 09/10: Extension of the short selling disclosure obligation) the FSA stated that there was majority support for maintaining the disclosure regime and extending it without time limit.

However, the FSA also reminds firms that it does not intend for the regime to be permanent. Instead it expects it to be superseded in due course by broader permanent disclosure measures (which it hopes will be agreed on the widest international basis possible) or be revoked.

The FSA expects to issue a feedback statement summarising the responses to its earlier discussion paper on short selling in the third quarter of 2009, and this will include feedback on alternative methods of increasing transparency.

At the same time the Committee of European Securities Regulators (CESR) updated the list of measures that its members have adopted on short selling. Revised submissions have been received from Austria. To view the CESR list, click here.

The European insurance market is undergoing a revolutionary overhaul. The existing insurance directives, some of which date back to the 1970s, are going to be pulled together into one regime (known as "Solvency II") which will require both insurers and reinsurers to hold adequate capital to match their risk profile. What makes the implementation of this revision in the regulation of insurance so interesting is that the discussions and negotiations between Member States, the European Commission and the insurance industry are taking place in the midst of the current financial crisis.

The Solvency II regime is structured along the same lines as the Basel II Accord with its "three pillar" approach to supervision (that is, maintenance of capital, governance and risk-management, and disclosure and transparency requirements). The Commission is very conscious of some of the perceived failings in the Basel II system and is under considerable pressure to ensure that the design of the new insurance regime is fit for purpose.

Insurers have been quick to comment that the current financial crisis is a banking crisis, not an insurance one. Adair Turner, Chairman of the Financial Services Authority, endorsed this view in his speech to the Association of British Insurers on the 9 June 2009.

From this perspective, insurers are lobbying hard in both the UK and elsewhere in Europe against a "one size fits all" approach under the new European supervisory order. Insurers maintain that they are currently better capitalised than banks and far less vulnerable to the liquidity risks evident in the banking system.

Any European "supervisor of supervisors" must have adequate representation from the insurance sector if it is to be effective in identifying systemic risks in the internal market for financial services. In its response to the report by the European Commission's High-Level Group on Financial Supervision in the EU (chaired by Jacques de Larosière), the Committee of European Insurance and Occupational Pensions Supervisors (CEIOPS) emphasised the need for the insurance sector to be represented on an equal footing with the banking and securities sectors in the European Systemic Risk Council.

Although less scrutinised than banking, insurers are determined to secure their place in the new European supervisory regime, with a risk based capital regime in place. Only time will determine the success of Solvency II in staving off an insurance crisis comparable to that in banking.

On 29 June 2009, a new Code of Practice for the Pensions Regulator (TPR) was brought into effect.

The Code, entitled "Circumstances in relation to the material detriment test", sets out TPR's intended approach in its use of its amended "moral hazard" powers introduced under the Pensions Act 2008. TPR states that "pragmatic and proportionate" will remain its key principles in its consideration of the issuing of contribution notices to employers sponsoring final salary schemes which are in funding deficit. The power for TPR to issue a contribution notice also came into force on 29 June 2009 but applies retrospectively to 14 April 2008.

The accompanying consultation response states that TPR wishes to allay concerns in the pensions industry that routine business transactions may be caught by the Code. TPR has also clarified that the Code complements the statutory criteria which it must satisfy before it can issue a contribution notice. These include that if an activity is materially detrimental to the scheme concerned, that it must be reasonable for TPR to issue a notice and that the statutory defence available for a target against a contribution notice does not apply.

With these safeguards in place, TPR does not expect any undue impact on corporate business or a significant increase in clearance applications.

TPR has also published some illustrative examples (contained in the consultation response) of how it will apply the Code in practice and further guidance is due to be published in Summer 2009.