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Article
Publication date: 1 March 1993

JUSTIN RUSHBROOKE

A large amount of legislation in the field of EC banking and financial services has been produced in preparation for the 1993 deadline for a single market. In some areas…

Abstract

A large amount of legislation in the field of EC banking and financial services has been produced in preparation for the 1993 deadline for a single market. In some areas the legislative programme has been more successful than in others. This paper examines one field, that of regulation of undertakings for collective investment in transferable securities — more commonly known in this country as unit trusts — and shows how far the aims of the single market legislators have been, and can realistically be, achieved in this context.

Details

Journal of Financial Regulation and Compliance, vol. 2 no. 1
Type: Research Article
ISSN: 1358-1988

Article
Publication date: 1 February 1996

DANIELE CIANI

The European single market, as laid down in the Treaty of Rome of 1958, aims at the suppression of the concept of national residence as far as economic relationships are…

Abstract

The European single market, as laid down in the Treaty of Rome of 1958, aims at the suppression of the concept of national residence as far as economic relationships are concerned. In the field of financial services, the creation of the single market is based on the fundamental principles of mutual recognition and minimum harmonisation. The setting up of such a market allows all financial institutions to operate under the freedom of establishment and to provide services cross‐border, benefiting from the ‘European passport’. The responsibility of the supervision of the institution is attributed to the home country authorities. Directive 611/85/EEC covers the market of professional management of investment funds (UCITS), which collect savings from a multitude of investors and invest in transferable securities. The directive allows the marketing of units of UCITS, as long as a wide set of prudential restrictions is fulfilled. At the end of 1994, UCITS in Europe were 6,818, of which around 32 per cent has been commercialised cross‐border. In 1994, the European Commission presented a new proposal to amend the UCITS directive, widening its scope and introducing several important modifications.

Details

Journal of Financial Regulation and Compliance, vol. 4 no. 2
Type: Research Article
ISSN: 1358-1988

Open Access
Article
Publication date: 5 April 2022

Matti Turtiainen, Jani Saastamoinen, Niko Suhonen and Tuomo Kainulainen

In the European Union, the Undertakings for Collective Investment in Transferable Securities Directive (UCITS IV) requires fund management companies to provide a Key…

Abstract

Purpose

In the European Union, the Undertakings for Collective Investment in Transferable Securities Directive (UCITS IV) requires fund management companies to provide a Key Investor Information Document (UCITS KIID) for investors. This papers uses archival data from the Finnish mutual fund market to test how the regulation's information disclosure requirements concerning past performance, risk and fund fees are associated with mutual fund flows.

Design/methodology/approach

The study uses archival data on the mutual funds market in Finland to test how the regulation relating to retail investors' information requirements is associated with mutual fund flows.

Findings

Our findings suggest that the UCITS KIID predicts retail investors' fund flows. While past performance is associated with fund flows throughout the observation period, retail investors appear to have become more sensitive to fund fees and invest in less risky funds following the adoption of the UCITS IV period.

Practical implications

Information relating to fund fees and risk appears to be relevant to retail investors, which should be acknowledged in future iterations of short-form disclosure and in mutual fund marketing.

Originality/value

This paper is the first to assess the significance of KIID in actual market environment.

Details

International Journal of Bank Marketing, vol. 40 no. 4
Type: Research Article
ISSN: 0265-2323

Keywords

Article
Publication date: 27 February 2007

Stéphane Janin

The aim of this paper is to analyze the impact of the Markets in Financial Instruments Directive (MiFID) on investment managers but also on funds' units as financial instruments.

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Abstract

Purpose

The aim of this paper is to analyze the impact of the Markets in Financial Instruments Directive (MiFID) on investment managers but also on funds' units as financial instruments.

Design/methodology/approach

Starting from the innovative legislative structure and scope of the MiFID, the paper assesses the way investment managers and funds'units are impacted, knowing that investment managers and funds'units are already largely tackled by another Directive, the UCITS Directive.

Findings

In spite of increasing many organizational and process requirements within investment management companies, the MiFID will probably not create dramatic changes in the daily functioning of those companies. However, the linkage between the provisions of the MiFID and the UCITS Directive has not been clearly made by European legislative institutions, which leaves uncertainties in the way the national legislators and regulators will transpose the MiFID in order to get the best consistence between this Directive and the UCITS one.

Research limitations/implications

Final assessment should be made once Member States have transposed the MiFID Directive and have enforced it in practice.

Originality/value

The value of the paper is to set a bridge between two different directives (the MiFID on the one hand, the UCITS Directive on the other hand) which both impact investment managers and funds' units.

Details

Journal of Financial Regulation and Compliance, vol. 15 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 2 May 2017

William J.G. Yonge

To provide an update and detailed explanation on the EU Regulation on Transparency of Securities Financing Transactions and of Reuse (“SFTR”).

142

Abstract

Purpose

To provide an update and detailed explanation on the EU Regulation on Transparency of Securities Financing Transactions and of Reuse (“SFTR”).

Design/methodology/approach

Examines the SFTR, its key measures and requirements.

Findings

Concludes with a number of considerations and recommendations. For example, it advises managers of Undertakings for Collective Investment in Transferable Securities (UCITS) and alternative investment funds (AIFs) to prepare to disclose details of their use of securities financing transactions and total return swaps.

Originality/value

Offers information on the SFTR and explains its requirements and scope. It has been written by a partner at an international law firm.

Article
Publication date: 3 July 2017

Lukas Prorokowski

To explain the shadow banking regime that will be enforced in the European Union by local regulators starting in January 2017.

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Abstract

Purpose

To explain the shadow banking regime that will be enforced in the European Union by local regulators starting in January 2017.

Design/methodology/approach

Recognising the regulatory-induced difficulties in the process of identifying certain types of clients (investment funds) as shadow banking entities, this article provides a decision tree for the shadow banking classification process in order to aid the impacted institutions with the assessment of their clients. With this in mind, the article advises the impacted institutions on the specific steps that should be taken when assessing investment funds for shadow banking flags. Furthermore, the article provides insights into the information required to conduct the shadow banking classification process.

Findings

The regime requires the impacted institutions to assess their clients for shadow banking flags in order to impose limits on credit lines to clients classified as shadow banking entities. The US regulatory jurisdiction will be impacted over a longer term.

Originality/value

The recommendations in this article will be especially useful for investment funds to ensure that the relevant information is clearly stated in their prospectuses in order to avoid being classified as shadow banking entities.

Open Access
Article
Publication date: 28 December 2021

Joseph Falzon and Elaine Bonnici

This paper empirically investigates the performance of Islamic funds, which have been praised for weathering the 2008 financial storm relatively well and compares it to a…

Abstract

Purpose

This paper empirically investigates the performance of Islamic funds, which have been praised for weathering the 2008 financial storm relatively well and compares it to a European product designed to protect the most vulnerable of investors, UCITS funds.

Design/methodology/approach

This paper builds on 128 time-series regressions using various factor models to analyse the risk-return relationship of 242 Islamic and UCITS funds relative to a market benchmark, over a 10-year period starting January 2006, to capture severe bear and bull market conditions.

Findings

Islamic funds do not face a competitive disadvantage arising from their strict compliance with Sharīʿah principles, and their performance and investment style is relatively similar to UCITS schemes.

Practical implications

Islamic funds represent a low risk investment due to their very mild betas. Therefore, when forming part of a diversified portfolio, they can act as a hedging tool against adverse market movements.

Social implications

Muslim investors are not punished relative to conventional retail investors when following their own beliefs. Other investors can consider Islamic funds in their portfolio allocation, especially those who seek socially and ethically responsible investments.

Originality/value

This paper fills a lacuna in the existing literature, because the sample is made up of Islamic funds established worldwide and includes not only equity, but also fixed income and mixed allocation funds.

Article
Publication date: 4 December 2020

Jeff Yao, Shaji Ravendran and Haiyang Zhang

The purpose of this article is to describe the globalization process of China’s asset management industry.

Abstract

Purpose

The purpose of this article is to describe the globalization process of China’s asset management industry.

Design/methodology/approach

This article looks at the globalization of China’s asset management industry from a bilateral perspective. On one hand, it analyzes new measures promulgated in China to expand the opening up of capital markets and attract foreign asset management institutions. On the other hand, it gives an introduction on some advisable choices for Chinese asset management companies to invest overseas.

Findings

With the promulgation of the Shanghai Guidebook for Overseas Asset Management Institutions among other measures that further liberate China’s financial market, 2020 marks an important era for foreign asset managers. Besides, this article suggests that Luxembourg, Ireland and the UK are ideal European destinations for Chinese asset management companies to invest in.

Practical implications

This article aims to keep foreign asset managers updated of new rules regarding financial market liberalization in China and help them to expand business in Shanghai. This article also gives a brief introduction on the fund industry in Ireland, Luxembourg and the UK, to give those Chinese asset management companies which are considering overseas investment some inspiration.

Originality/value

Practical guidance from experienced lawyers in the practice of foreign investment and capital markets.

Details

Journal of Investment Compliance, vol. 21 no. 2/3
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 22 February 2008

Begoña Torre Olmo, Sergio Sanfilippo Azofra and Carlos López Gutiérrez

The objective of this paper is to review Spanish regulatory evolution in the collective investment area, which is very recent in its principal aspects.

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Abstract

Purpose

The objective of this paper is to review Spanish regulatory evolution in the collective investment area, which is very recent in its principal aspects.

Design/methodology/approach

The paper assesses the way investment funds are impacted by the Markets in Financial Instruments Directive (MiFID) and the Spanish legislation.

Findings

The legal aspect of the Collective investment institutions (CII) in Spain has experienced a major renovation over the past four years. There were three basic principles: increased flexibility of the CIIs' regime, reinforced protection for investors, and improved administrative intervention regime. Although MiFID focuses its attention on financial markets and investment firms, it also implies an important change for collective investment institutions. New conditions arising after the introduction of this norm are imposing major challenges for financial entities, supervisory authorities and financial markets.

Research limitations/implications

The unified regulatory system, even after the implementation of MiFID, remains fragmented, and the way in which it will apply to investment funds is not easy to disentangle.

Practical implications

As a result of this process, it is hoped that levels of competitiveness will increase and transaction costs fall, which will ultimately result in improved conditions for investors and more efficient companies.

Originality/value

The paper establishes the implications of the MiFID and the UCITS Directives for the investment fund industry in Spain.

Details

Journal of Financial Regulation and Compliance, vol. 16 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Book part
Publication date: 9 July 2018

Katica Tomic

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs…

Abstract

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs) Regulation for all EU Member States and gives National Competent Authorities (NCAs), European Securities and Markets Authority (ESMA), and European Banking Authority (EBA) powers to monitor financial products (and services) under their supervision and to “temporarily” prohibit or restrict the marketing, distribution, or sale of certain financial instruments, or to intervene in relation to certain financial activities or practice. This extends the supervisory measures defined in MiFID II to any PRIIPs (including insurance-based investment products “IBI products”) that would not otherwise fall under the scope of MiFID II. Product intervention power is given to the NCAs, and in order to use power, it requires to take the specifics of the individual case into account and a series of conditions, criteria, and factors to fulfill. Moreover, ESMA and the EBA have a type of control function and ability to override national regulators on product. The aim of product intervention powers is to ensure strengthening of investor protection, but given the potential significant impact of this power, calls into question of possibility to delay innovation and slow down product developments on the capital market.

This paper provided an overview of supervisory measures on product intervention, that is, scope of the product intervention power, criteria, factors, and risks which have to be taken into consideration when using this regulator’s tool.

Details

Governance and Regulations’ Contemporary Issues
Type: Book
ISBN: 978-1-78743-815-6

Keywords

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