The Association of Investment Companies (AIC) has welcomed the Financial Services Authority's consultation paper calling for greater disclosure of economic interests in company shares held in Contracts for Differences (CfDs).

In an attempt to address the potential market failures that could be the result of using CfDs on an undisclosed basis to influence corporate governance , the FSA has outlined alternative methods of ensuring greater levels of disclosure.

Responding to the paper, Guy Rainbird, public affairs director at the AIC, said that the organisation had been concerned with the level of CfD disclosure seen in recent years.

Without transparency through appropriate market disclosure there is a risk that some investors could be in the dark about the true demand for the shares, Mr Rainbird commented.

This could potentially weaken the market's ability to price stock , which could in turn affect investors' ability to make fully-informed decisions about their investments , he added.