More On Legal & Compliancefrom The Advisor's Professional Library
- Where Are We Headed? The ultimate compliance goal is to help ensure that everyone associated with an advisory firm acts ethically at all times. Advisors and RIAs should do the right thing, even when regulators are not looking over their shoulders.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
In a bid to control the sort of trading that destabilized markets and put the euro in danger, the European Union proposed a series of rules governing such trades.
As reported in The New York Times on Wednesday, the proposed rulesare in line with those already put in place by the U.S., and are aimed at preventing economic destabilization in the wake of bank collapses.
Michel Barnier, commissioner for the European Union’s internal markets, said markets needed reassurance that Europe was using a single set of rules regarding short selling that would defend weaker economies.
France and Germany have blamed the selling of naked shorts for intensifying the economic problems of such countries as Portugal, Spain, and Greece; under the new rules, selling naked shorts could be restricted or even banned in some circumstances.
Rules were also proposed to provide more information about derivatives and their markets to both regulators and investors, particularly since derivatives “have a big impact on the real economy, from mortgages to food prices,” said Barnier. He also said that regulators should have access to similar information about bond market short positions and credit default swaps as well.
The rules concerning the sale of naked shorts arose out of Germany’s ban of the action in May. Regulators in other countries and at EU headquarters in Brussels were angered by the action, but in June Germany said that regulatory steps were moving too slowly and costing governments more money to meet obligations.