Skip to main content Accessibility help
×
Hostname: page-component-7c8c6479df-nwzlb Total loading time: 0 Render date: 2024-03-28T14:31:32.355Z Has data issue: false hasContentIssue false

3 - Product regulation

Published online by Cambridge University Press:  26 February 2010

Niamh Moloney
Affiliation:
London School of Economics and Political Science
Get access

Summary

Product regulation and the retail markets

The EC and product regulation

Retail investment products (sometimes termed ‘packaged products’) can take myriad forms. They include mutual funds or collective investment schemes (CISs) which pool investor assets (whether held in a corporate or other form and whether represented by a share or other unit), are managed according to investment mandates and redeem investors' investments on demand (or are ‘open-ended’); these structures are the main concern of EC product regulation. Investment trusts or companies which engage in investment business and in which investors hold often listed shares, unit-linked insurance products and a burgeoning array of structured retail investment products are also popular retail market products.

Product design regulation, typically linked to the authorization of the product for public marketing and so associated with segmentation-based regulation, is one of the three arcs of retail market protection along with the regulation of distribution and disclosure. Product regulation in the EC regime is largely a function of the ‘UCITS’ regime which provides a cross-border marketing passport for CISs in the form of UCITS and their management companies. Major reforms in 2002 (the UCITS III reforms) significantly increased the range of UCITS investable assets. The UCITS IV reforms, currently in train, are designed to bring efficiencies to the UCITS market and to reform the UCITS disclosure regime (chapter 5).

Type
Chapter
Information
How to Protect Investors
Lessons from the EC and the UK
, pp. 134 - 191
Publisher: Cambridge University Press
Print publication year: 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Gray, J., ‘Personal Finance and Corporate Governance: The Missing Link: Product Regulation and Policy Conflict’ (2004) 4 Journal of Corporate Law Studies187, 201CrossRefGoogle Scholar
Gerke, W., Bank, M. and Steiger, M., ‘The Changing Role of Institutional Investors – A German Perspective’ in Hopt, K. and Wymeersch, E. (eds.), Capital Markets and Company Law (Oxford: Oxford University Press, 2003), p. 357Google Scholar
Johnson, S., ‘How UCITS Became a Runaway Success’, Financial Times, Fund Management Supplement, 27 November 2006, p. 3Google Scholar
Hu, H., ‘The New Portfolio Society, SEC Mutual Fund Disclosure and the Public Corporation Model’ (2005) 60 Business Lawyer1303, 1307Google Scholar
Frankel, T. and Cunningham, L., ‘The Mysterious Ways of Mutual Funds: Market Timing’ (2006) 25 Annual Review of Banking and Financial Law235Google Scholar
Page, A. and Ferguson, R., Investor Protection (London: Weidenfeld and Nicolson, 1992), pp. 182–3Google Scholar
Roe, M., ‘Political Elements in the Creation of a Mutual Fund Industry’ (1991) 139 University of Pennsylvania Law Review1469CrossRefGoogle Scholar
Mahoney, P., ‘Manager–Investor Conflicts in Mutual Funds’ (2004) 18 Journal of Economic Perspectives161CrossRefGoogle Scholar
Choi, S. and Kahan, M., ‘The Market Penalty for Mutual Fund Scandals’ (2007) 87 Boston University Law Review1021Google Scholar
Choi, S., ‘Regulating Investors Not Issuers: A Market-Based Proposal’ (2000) 88 California Law Review279CrossRefGoogle Scholar
Jackson, H., ‘To What Extent Should Individual Investors Rely on the Mechanisms of Market Efficiency: A Preliminary Investigation of Dispersion in Investor Returns’ (2003) 28 Journal of Corporation Law671Google Scholar
Ribstein, L., ‘Bubble Laws’ (2003) 40 Houston Law Review77Google Scholar
Langevoort, D., ‘Re-reading Cady Roberts: The Ideology and Practice of Insider Trading Regulation’ (1999) 99 Columbia Law Review1319CrossRefGoogle Scholar
Langevoort, D., ‘Selling Hope, Selling Risk: Some Lessons from Behavioral Economics about Stockbrokers and Sophisticated Investors’ (1996) 84 California Law Review627CrossRefGoogle Scholar
Barber, B., Lee, Y.-T., Liu, Y.-J. and Odean, T., ‘Just How Much do Individual Investors Lose by Trading?’ (2009) 22 Review of Financial Studies609CrossRefGoogle Scholar
French, K., ‘Presidential Address: The Cost of Active Investing’ (2008) 63 Journal of Finance1537CrossRefGoogle Scholar
Freeman, J. and Brown, S., ‘Mutual Fund Advisory Fees: The Costs of Conflicts of Interests’ (2001) 26 Journal of Corporation Law609, 614Google Scholar
Authers, J., ‘Is It Back to the Fifties?’, Financial Times, 25 March 2009, p. 9Google Scholar
Sullivan, R., ‘Passive Fund Sector Ticks All the Boxes for Growth’, Financial Times, Fund Management Supplement, 19 January 2009, p. 3Google Scholar
Benjamin, J., Financial Law (Oxford: Oxford University Press, 2007), p. 189Google Scholar
Roiter, E., ‘Delivering Fiduciary Services to Middle and Working Class Investors’ (2004) 23 Annual Review of Banking and Financial Law851, 852Google Scholar
Hu, H., ‘Illiteracy and Intervention: Wholesale Derivatives, Retail Mutual Funds, and the Matter of Asset Class’ (1996) 84 Georgetown Law Journal2319, 2378Google Scholar
Jackson, H., ‘Regulation in a Multi-sectored Financial Services Industry: An Exploration Essay’ (1999) 77 Washington University Law Quarterly319Google Scholar
Palmiter, A., ‘The Mutual Fund Board: A Failed Experiment in Regulatory Outsourcing’ (2006) 1 Brooklyn Journal of Corporate, Financial, and Commercial Law165Google Scholar
Shiller, R., Irrational Exuberance (Princeton and Oxford: Princeton University Press, 2000), pp. 197–200Google Scholar
Karmel, R., ‘Mutual Funds, Pension Funds and Stock Market Volatility – What Regulation by the Securities and Exchange Commission Is Appropriate?’ (2004–5) 80 Notre Dame Law Review909, 918Google Scholar
Romano, R., ‘A Comment on Information Overload, Cognitive Illusions, and Their Implications for Public Policy’ (1986) 59 Southern California Law Review313, 320Google Scholar
Coates, J. and Hubbard, R., ‘Competition in the Mutual Fund Industry: Evidence and Implications for Policy’ (2007) 33 Journal of Corporation Law151Google Scholar
Gray, J., ‘The Sandler Review of Medium and Long-Term Retail Savings in the UK: Dilemmas for Financial Regulation’ (2002) 10 Journal of Financial Regulation and Compliance385, 391Google Scholar
Hortacsu, A. and Syverson, C., ‘Product Differentiation, Search Costs, and Competition in the Mutual Fund Industry: A Case Study of S&P 500 Index Funds’ (2004) 119 Quarterly Journal of Economics403CrossRefGoogle Scholar
Skypala, P., ‘Careful Handling Needed to Safeguard UCITS’ Reputation', Financial Times, Fund Management Supplement, 14 April 2008, p. 6Google Scholar
Ring, P., ‘A Critical Analysis of Depolarization’ (2004) 12 Journal of Financial Regulation and Compliance248, 256CrossRefGoogle Scholar
Aboulian, B., ‘Product Development Falls off Agenda’, Financial Times, Fund Management Supplement, 5 January 2009, p. 11Google Scholar
Frazzini, A. and Lamont, O., ‘Dumb Money: Mutual Fund Flows and the Cross-Section of Stock Returns’ (2008) 88 Journal of Financial Economics299, 319CrossRefGoogle Scholar
Otten, R. and Bams, D., ‘European Mutual Fund Performance’ (2002) 8 European Financial Management75CrossRefGoogle Scholar
Cox, J. and Payne, J., ‘Mutual Fund Expense Disclosures: A Behavioral Perspective’ (2005) 83 Washington University Law Quarterly907Google Scholar
Elton, E., Gruber, M. and Busse, J., ‘Are Investors Rational? Choices Among Index Funds’ (2004) 59 Journal of Finance261CrossRefGoogle Scholar
Zheng, L., ‘Is Money Smart?: A Study of Mutual Fund Investors’ Fund Selection Ability' (1999) 54 Journal of Finance901CrossRefGoogle Scholar
Sapp, T. and Tiwari, A., ‘Does Stock Return Momentum Explain the “Smart Money” Effect?’ (2004) 59 Journal of Finance2605CrossRefGoogle Scholar
Aneel, K. and Stoli, D., ‘Which Money Is Smart?: Mutual Fund Buys and Sells of Individual Investors’ (2008) 63 Journal of Finance85Google Scholar
Jain, P. and Wu, J., ‘Truth in Mutual Fund Advertising: Evidence on Future Performance and Fund Flows’ (2000) 55 Journal of Finance937CrossRefGoogle Scholar
Nickerson, K. and Grene, S., ‘IMA Concern over “Cash-Plus” Label’, Financial Times, Fund Management Supplement, 12 January 2009, p. 2Google Scholar
Cooper, M., Gulen, H. and Raghavendra, R., ‘Changing Names with Style: Mutual Fund Name Changes and Their Effects on Fund Flows’ (2005) 60 Journal of Finance2825CrossRefGoogle Scholar
Bollen, R., ‘A Case Study of Bounded Rationality in the Market for Superannuation Products’ (2007) 4 Macquarie Journal of Business Law49Google Scholar
Costanzo, L. and Ashton, J., ‘Product Innovation and Consumer Choice in the UK Financial Services Industry’ (2006) 14 Journal of Financial Regulation and Compliance285CrossRefGoogle Scholar
Shleifer, A., Inefficient Markets: An Introduction to Behavioural Finance (Oxford: Oxford University Press, 2000), pp. 53–88CrossRefGoogle Scholar
Aboulian, B., ‘Liquidity Tightening Now on the Agenda’, Financial Times, Fund Management Supplement, 12 January 2009, p. 11Google Scholar
Johnson, S., ‘Rescue Plan for Investment Trusts’, Financial Times, Fund Management Supplement, 9 February 2009, p. 1Google Scholar
Grene, S., ‘Luxembourg Called on to “Brush up” Governance’, Financial Times, Fund Management Supplement, 26 January 2009, p. 3Google Scholar
Johnson, S., ‘Hedge Funds March Towards UCITS’, Financial Times, Fund Management Supplement, 23 February 2009, p. 1Google Scholar
McCallum, J., ‘Mutual Fund Market Timing: A Tale of Systemic Abuse and Executive Malfeasance’ (2004) 12 Journal of Financial Regulation and Compliance170CrossRefGoogle Scholar
Pinciss, E., ‘Sunlight is Still the Best Disinfectant: Why the Federal Securities Law Should Prohibit Soft Dollar Arrangements in the Mutual Fund Industry’ (2004) 23 Annual Review of Banking and Financial Law864Google Scholar
Johnson, S., ‘New Products Make Use of UCITS Power’, Financial Times, Fund Management Supplement, 12 March 2007, p. 3Google Scholar
Burgess, K., ‘Product Does More Than It Says on the Tin’, Financial Times, Fund Management Supplement, 3 March 2008, p. 20Google Scholar
Johnson, S., ‘Sophistication Goes Mass Market’, Financial Times, Fund Management Supplement, 5 November 2007, p. 1Google Scholar
Johnson, S., ‘FSA Warns on Derivatives Danger’, Financial Times, Fund Management Supplement, 11 February 2008, p. 1Google Scholar
Johnson, S., ‘Dublin “Approves” Hedge Fund Indices’, Financial Times, Fund Management Supplement, 25 February 2008, p. 2Google Scholar
Johnson, S., ‘How UCITS Became a Runaway Success’, Financial Times, Fund Management Supplement, 27 November 2006, p. 3Google Scholar
Saunders, R., ‘What's Right or Not for Ordinary Investors’, Financial Times, Fund Management Supplement, 14 January 2008, p. 6Google Scholar
Johnson, S. and Aboulian, B., ‘Convergence Strategy under Threat’, Financial Times, Fund Management Supplement, 16 March 2009, p. 1Google Scholar
Johnson, S., ‘UCITS Outflows Soar in Q3’, Financial Times, Fund Management Supplement, 1 December 2008, p. 2Google Scholar
Skypala, P., ‘No Verdict Yet, in Advice vs Passive Debate’, Financial Times, Fund Management Supplement, 19 May 2008, p. 6Google Scholar
,International Organization of Securities Commissions, Review of the Regulatory Issues Relating to Real Estate Funds (IOSCO, 2008), p. 2Google Scholar
McVea, H., ‘Hedge Funds and the New Regulatory Agenda’ (2007) 27 Legal Studies709CrossRefGoogle Scholar
Moloney, N., ‘The EC and the Hedge Fund Challenge: A Test Case for EC Securities Policy after the Financial Services Action Plan’ (2006) 6 Journal of Corporate Law Studies1CrossRefGoogle Scholar
Ricketts, D., ‘Mutual Funds Move Back into the Black’, Financial Times, Fund Management Supplement, 19 January 2009, p. 11Google Scholar
Aboulian, B., ‘Liquidity Tightening Now on the Agenda’, Financial Times, Fund Management Supplement, 12 January 2009, p. 11Google Scholar
McVea, H., ‘Hedge Fund Asset Valuations and the Work of the International Organization of Securities Commissions (IOSCO)’ (2008) 57 International and Comparative Law Quarterly1CrossRefGoogle Scholar
Skypala, P., ‘Hedge Fund Indices Access Likely’, Financial Times, Fund Management Supplement, 12 February 2007, p. 2Google Scholar
Shadab, H., ‘Fending for Themselves: Creating a US Hedge Fund Market for Retail Investors’ (2008) 11 New York University Journal of Legislation and Policy252Google Scholar
Moloney, N., EC Securities Regulation (2nd edn, Oxford: Oxford University Press, 2008), pp. 333–5Google Scholar
Athanassiou, P., Hedge Fund Regulation in the European Union: Current Trends and Future Prospects (Kluwer Law International, 2009)Google Scholar
Hughes, J., ‘Products Backed by Lehman Spark FSA Probe’, Financial Times, 8 May 2009, p. 3Google Scholar
Skypala, P., ‘What Does Brussels Really Want?’, Financial Times, Fund Management Supplement, 14 July 2008, p. 6Google Scholar
Benjamin, J. and Rouch, D., ‘Providers and Distributors: Responsibilities in Relation to Structured Products’ (2007) 1 Law and Financial Markets Review413CrossRefGoogle Scholar
Johnson, S., ‘UK Takes Shine to Structured Products’, Financial Times, Fund Management Supplement, 26 May 2008, p. 3Google Scholar
Rasmussen, A.-S. Rang, ‘Index-Linked Bonds’ in Danish Central Bank Monetary Review, Second Quarter 2007 (Danish Central Bank, 2007), p. 51Google Scholar
Burgess, K. and Ross, A., ‘L&G Will Pay Price of Lehman Collapse’, Financial Times, 16 December 2008, p. 17Google Scholar
Mackintosh, J., Guerrera, F. and Sender, H., ‘Leading Banks Lent Billions to Feeder Funds for Bets on Madoff’, Financial Times, 19 December 2008, p. 1Google Scholar
Black, J. and Nobles, R., ‘Personal Pensions Misselling: The Cases and Lessons of Regulatory Failure’ (1998) 61 Modern Law Review789CrossRefGoogle Scholar

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

  • Product regulation
  • Niamh Moloney, London School of Economics and Political Science
  • Book: How to Protect Investors
  • Online publication: 26 February 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511674808.004
Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

  • Product regulation
  • Niamh Moloney, London School of Economics and Political Science
  • Book: How to Protect Investors
  • Online publication: 26 February 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511674808.004
Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

  • Product regulation
  • Niamh Moloney, London School of Economics and Political Science
  • Book: How to Protect Investors
  • Online publication: 26 February 2010
  • Chapter DOI: https://doi.org/10.1017/CBO9780511674808.004
Available formats
×