News
eFocus - Autumn 2007
Introduction - By Dean Brown, Performa CEO
Welcome to the latest edition of eFocus, the newsletter from Performa keeping you in touch with the world of GIPS and all the latest news from Performa.
On 1st November 2007, the Markets in Financial Instruments Directive (MiFID) was introduced in all member states of the European Union. Its aim is to create a single European market for the financial services industry, and common legal requirements for all investors and providers within the European Union. Investors should benefit from greater regulatory protection and increased transparency – the call for greater transparency should of course sound very familiar to all of us accustomed to GIPS.
So is there a linkage? A recent paper by Ernst & Young suggests that there is. GIPS presentations can be used to support compliance with MiFID, given that a number of the MiFID regulations are already encompassed by GIPS (e.g. minimum five year performance history, defined reporting currency, annualised returns etc). It has also been suggested that there is a direct correlation between the standard GIPS compliant presentation and what MiFID refers to as a “marketing communication” (ref. Article 19(2)).
But are there any areas of conflict between GIPS and MiFID? Again, the EY article suggests that no conflicts exist – for the moment. As of 1st November, a number of countries are not yet ready for the changes that it brings – when they are, the possibility arises that country specific clashes with GIPS may occur.
Ultimately, the drivers behind MiFID are sound, as with GIPS. Although one is mandatory and the other an industry driven regulatory standard, GIPS has shown that a level playing field, regulation and process can add significant value to the investment process. And having seen the problems that some investment houses are having with structured finance, which was kept extremely opaque in the name of financial innovation, it is clear that a little transparency can go a long way.
Lastly, two words of thanks. Firstly, I would like to thank Paul Copplestone of Gartmore for his guest article that discusses Performance Measurement being more akin to compromise than rocket science. Secondly, I would like to thank the entire staff of Performa, who have worked tirelessly over the past year, allowing Performa to successfully launch R3.0 of the Performa Product Suite at the end of October. Their hard work and dedication is one of the key contributors to the current rapid growth phase being enjoyed by Performa.
I do hope you enjoy this edition of eFocus.