Support for greater transparency within the alternatives investment management industry is high among members of the CFA Institute Centre for Financial Market Integrity.
In a recent survey conducted by the Centre - whose members include portfolio managers, research analysts, consultants and investment bakers from across Europe - 94% said they support mandatory requirements that managers of alternative investment funds act with honesty, fairness, and with the best interests of investors in mind. This is consistent with the proposed Alternative Investment Fund Managers (AIFM) Directive.
The study also revealed strong support (80%) for the proposal that alternative investment fund managers be mandated to appoint an independent third party for the valuation of assets; while 59% believe that alternatives managers should be subject to regulatory authorisation when marketing to professional or retail investors.
In contrast, 60% of respondents do not agree that authorities should have the capacity to set limits on levels of leverage used by alternative investment fund managers in their funds; while 68% disagree with the notion that authorities should be allowed to place limits on the extent of short-selling activity carried out by alternative investment fund managers.
Commenting on the results, Charles Cronin, CFA, head of the CFA Centre for Financial Market Integrity (Europe, Middle East, and Africa) said: "Our members have signalled that regulation in this sector is necessary, along with equivalent transparency and disclosure. The Centre also feels it is important to ensure that the system is balanced in favour of client interest and that it addresses the issues of systemic risk to prevent future crises."
The CFA Institute Centre has recently published the 2009 Financial Market Integrity Index, a report looking into the perceptions investment professionals have about the state of ethics and integrity in six major financial services markets. CFA Institute Centre publications are available for free download at www.cfapubs.org/loi/ccb.
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