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CFA Institute Centre Releases Results of 2008 Financial Market Integrity Index

 

New York and Washington, DC, November 18, 2008 – Today the CFA Institute Centre for Financial Market Integrity announced that the results of its 2008 Financial Market Integrity (FMI) Index are available. The FMI Index furthers the global discussion about financial market integrity and represents investors concerns about the level of integrity, the effectiveness of regulation, and the strength of investor protections that they face in their respective markets.

 

“The purpose of the Financial Market Integrity Index project and this 2008 U.S. report is to inform investors and regulators. It provides data on the level of ethics and integrity of markets and practitioners from the perspective of professionally trained analysts. The integrity and effectiveness of regulatory systems in the U.S. have never been under greater scrutiny,” said Kurt Schacht, CFA, managing director of the CFA Institute Centre. “We plan annual surveys to gauge the level of confidence and progress, in this and other global markets, in promoting ethical behavior.”

 

More than 2,000 CFA charterholders in six countries (Canada, Hong Kong, Japan, Switzerland, the United Kingdom, and the United States) were surveyed between April 2 and May 8, 2008. They were asked to evaluate and rate a number of financial market participants, including sell-side analysts, hedge fund managers, board members, and others as well as market systems, such as market regulation and investor protections (e.g., governance, shareowner rights, and transparency).

 

Key findings from the U.S. FMI Index are:

 

  • The final overall rating for the U.S. is a mid-range 2.9 on a five-point scale. This less-than-optimal rating is primarily caused by respondents’ low rating of U.S. market systems.
  • Based on respondents’ comments collected in the survey, conflicts of interest is an area of primary concern, especially in the wake of the subprime crisis and concerns about conflicts at credit rating agencies.
  • Respondents outside of the U.S. were more critical of U.S. market integrity, rating overall ethical behavior of market participants and effectiveness of capital market systems 10 percent lower than those inside the U.S.
  • Based on ethics and integrity alone, 68 percent of U.S. respondents were either very likely or likely to recommend investing in U.S. markets. Those outside the U.S. responded comparably, at 67 percent.

 

Journalists are invited to hear Roel C. Campos, partner at Cooley Godward Kronish LLP and former U.S. SEC Commissioner, speak about the results of the FMI Index, market ethics, and regulation. To attend, please RSVP to kathy.valentine@cfainstitute.org.

 

November 18, 2008 − Market Participant Ethics and Effective Market Regulation

Location: Willard Intercontinental Hotel (Fillmore Room)
Time: 12:00 p.m. to 1:30 p.m.
Speakers:

  • Roel C. Campos, partner at Cooley Godward Kronish LLP and former U.S. SEC Commissioner.
  • Matt Orsagh, CFA, CIPM, senior policy analyst and FMI project manager, CFA Institute Centre

 

The integrity of the U.S. regulatory system and market participants is at a critical stage. Most investors agree that to restore confidence, regulators and participants must seriously resolve issues of transparency, conflicts of interest, and effective regulation. The CFA Institute Centre for Financial Market Integrity has conducted an annual study − the Financial Market Integrity Index − to gauge the perceptions investment professionals have about the state of ethics and integrity in financial services markets.

 

CFA Institute Centre for Financial Market Integrity

The CFA Institute Centre develops timely, practical solutions to global capital market issues. Established in 2004, the CFA Institute Centre builds upon the CFA Institute mission to lead the investment profession globally by setting the highest standards of ethics, education, and professional excellence. It carries forward the organization’s 60-year history of standards and advocacy work, especially its Code of Ethics and Standards of Professional Conduct for the investment profession. More information may be found at www.cfainstitute.org/centre.