Respondents continue to be concerned about
the effectiveness of Canada's regulatory framework
2010 Canadian Financial Market Integrity Index Now Available
CHARLOTTESVILLE, VA, June 8 /CNW/ - CFA Institute today released results of the 2010 Financial Market Integrity Index (FMI) report for Canada which show that Canadian CFA charterholders have more confidence and trust in the effectiveness of their own financial system and capital markets than at any point in the past three years.
Despite this, the perceived lack of effectiveness of Canada's regulatory framework remains an important issue for Canadian CFA charterholders and, according to respondents, the best recourse is the introduction of a single, unified securities regulator.
The FMI Index gauges CFA charterholders' perceptions of the state of ethics and integrity in six different countries around the world (Canada, Germany, Hong Kong, Japan, the United Kingdom, and the United States) and how these perceptions change over time. (Read all reports.)
"Based on the comments of Canadian survey respondents regarding the integrity of Canada's financial system and capital markets, it is evident that Canadian charterholders believe conditions have been steadily improving over the past three years," said Matt Orsagh, CFA, CIPM, Director, Capital Markets at CFA Institute. "This growing confidence, took place during one of the worst economic meltdowns in recent history.
"It appears that those in Canada have steadily become more assured of the soundness of their system after watching other markets suffer far worse damages as a result of the global financial crisis."
Further, survey respondents outside of Canada have consistently viewed the integrity of Canadian markets even more favourably than do those inside Canada. This held true even in the midst of the recent global financial crisis and the subsequent market lows of early 2009.
"Clearly, CFA charterholders around the globe feel there is much to be learned from the Canadian experience," Orsagh said.
Negative perceptions, however, regarding the state of capital markets regulation in Canada continue to exist among the country's CFA Charterholders.
Since 2008, respondents' primary concern has been the state of Canada's regulatory system. In the comments section of the report, almost 40 per cent of respondents (a) identify this issue and (b) indicate their support for a "one regulator" model to help coordinate regulation and strengthen regulatory enforcement mechanisms.
As a result, CFA Institute recently reaffirmed the position of its Canadian members in response to the release of the Canadian Securities Act that Canadian markets will benefit from the introduction of a single, unified securities regulator with enforceable jurisdiction.
The Canadian FMI Index also reported:
- Canadian charterholders see significant improvements in the following
areas of capital market systems: accounting standards, corporate
governance, transparency, legal protections and shareholder rights.
- Willingness to invest in Canada has improved over the past year. This
year, approximately 82 percent of survey participants in Canada stated
that they are likely or very likely to recommend investing in Canada.
This is based primarily on the integrity of market participants and
the effectiveness of market protections. In 2009, this number was 72
percent, and in 2008, it was 79 percent.
- Perceptions of the ethical behavior of financial professionals
improved over last year however, the scores reflect disparity among
the categories with pension fund managers receiving the highest rating
and hedge fund managers receiving the lowest.
- Respondents cite concerns about the ethical integrity of financial
advisors and specifically questioned whether advisors always put
clients' interests before their own and advisor investing/compensation
- Canadian charterholders remain concerned about the ongoing presence of
insider trading, combined with a lack of enforcement to stop and/or
"It is evident that Canadian respondents have a unique perspective as they weathered a global financial crisis in a country where capital markets and financial institutions proved comparatively sound," Orsagh said.
As for the debate over the adoption of the single, national regulator, Orsagh concludes: "CFA Institute welcomes the opportunity to participate in this national discussion. We believe that our global experience, investor-focused approach, and expertise in securities regulation will provide a neutral and balanced voice to this issue."
More than 2,700 investment professionals - including over 570 in Canada - with the CFA designation participated in the research for the 2010 FMI by taking the survey either online or by scripted telephone interview between February 1, 2010 and March 9, 2010.
CFA Institute is the global association for the investment profession. It administers the CFA and CIPM curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has nearly 100,000 members, who include the world's 85,000 CFA charterholders, in 134 countries and territories, as well as 136 affiliated professional societies in 57 countries and territories.
SOURCE CFA Institute
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