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Index construction: leading body warns against ‘false promises’
Markets
by Emma Dunkley on Mar 11, 2013 at 10:40
The trade body’s recommendations come shortly after a parliament hearing last week , on the Kay review of UK equity markets and long-term decision making.
During this hearing, Invesco Perpetual’s Neil Woodford, who runs more than £30 billion and is head of UK equities at the firm, has urged other fund managers in the active space to focus on corporate governance and act like owners of companies they hold stakes in.
He said: ‘I am an exception in the industry,’ said Woodford. ‘I take corporate engagement very seriously.The industry is failing on this point, but it is possible…to accept responsibility of ownership.’
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1 comment so far. Why not have your say?
Frederic via mobile
Mar 12, 2013 at 01:19
Precisely, the Institute is taking exception with advice to ESMA (by the ESMA Securities Markets Stakeholders Group) and defending the (extension of the) new transparency requirements imposed by ESMA on UCITS (applicable from 17 February).
The Institute favours market-based corporate governance mechanisms over mechanisms such as supervisory committees or declarations of adherence to codes of ethics or good practice, which have been tested to be ineffective.
Market-based governance mechanisms crucially depend on transparency (and on people like Mr Woodford doing their work).
In the context of indices, transparency is the best tool against the risks pised by conflicts of interest and more importantly indispensable for informed decision-making by users.
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