European jury’s out over impact of trading abuses
Roxane McMeeken finds some wealth managers more worried than others.
Recent trading abuse scandals have sparked divisions among Europe’s financiers over what their impact will be on the attitudes of wealthy investors.
Andreas Mondovits, head of sales management EMEA, UBS Global Asset Management, argued that the industry must now work to regain lost trust from its clients. He advocated honing the fund range and ensuring that customers are up to speed with the risks associated with various investments.
Marc Raynaud, head of distribution at BNP Paribas Asset Management (BNP PAM), disagreed. “I don’t think individual investors understand what’s happening. Maybe it’s different in the US, where investors are more sophisticated.”
He did concede that the revelations of market timing and late trading at firms such as Alliance Capital and Putnam Investments “could create a trust issue among some investors, especially in the UK, where more people read the Financial Times”. But he said that investors in Italy, France and Spain were likely to be oblivious. “Not many people in France read Les Echos or La Tribune.”
Mr Raynaud added that in the US, rules on improper trading were lax compared with Europe. “At BNP Paribas we didn’t have the problem at all because for years and years our cutoff time for trading has been much earlier than the close of the markets.”
BNP PAM’s cutoff point for trading is 3pm Luxembourg time (8am Eastern Standard Time).
The latest fund manager to be dragged into the market timing furore is Amvescap. The Anglo-American giant has admitted that its procedures against improper trading at its subsidiary Invesco Funds Group are “not completely effective”. When the US Securities and Exchange Commission first charged the group, Amvescap vigorously denied the claims, but in a dramatic about-turn the firm is now seeking to settle the charges.
