Wednesday July 9 2008

News Source: Fund Regulation

Focus: General - Fund Regulation

Type: General

Country: European Union




The European Parliament has approved a resolution in which it proposes greater transparency in the operation of the sovereign wealth funds (SWF). It wants to see a global code of conduct and for the Commission to examine what measures might be taken under EU law to ensure a proper understanding of their structures and motives.

With 661 votes to favour and 11 against, the resolution calls for the commission to work with the IMF and OECD towards a global code of conduct for SWFs, The European parliament has asked the commission to supervise the activities of the SWFs and to play its part of coordination such that national initiatives do not go against the commitment to openness to investments or endanger the EU `s position on global markets.

SWFs have existed for more than two decades, but their recent role in the bailouts of large financial institutions affected from the US mortgage crisis has raised political concern that major economic sectors may become foreign owned.

SWFs are state owned investment funds from around the world that manage excess reserves. The assets controlled by SWFs are estimated to amount to USD $ 3 trillion US dollars (£ 1.5 Trillion) and the IMF expects this figure to peak USD $ 10 Trillion by 2012.

The International Monetary Fund `s 23-country International Working Group (IWG) of SWF’s is expected to have resumed discussions on a common set of voluntary principles for SWFs, drawing on the existing body of principles and practices, to help maintain the free flow of cross-border investment and open and stable financial systems widely accepted principles and practices that will promote transparency.

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The Funds-Axis Ltd team is currently engaged in extensive review of Sovereign Wealth Fund investments. For further information contact sibtain.sajan@funds-axis.com

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