Healthy Markets Association Releases New Report
Benchmark-Linked Investments: Managing Risks and Conflicts of Interest
On March 7, 2019, the Healthy Markets Association released a ground-breaking report on improving oversight of benchmark-linked investments.
Over the past several years, millions of investors have placed trillions of dollars into investment products that are linked to benchmarks for interest rates, foreign exchange rates, equities prices, and countless other reference points. These benchmark-linked investment products range from mutual funds that track the S&P 500 index to complex, customized swaps use by the world’s largest pension funds and companies.
Unfortunately, the benchmarks underpinning many of these products may be (1) subject to conflicts of interest, (2) susceptible to manipulation, and (3) insufficiently transparent to ensure their accuracy or integrity. Worse, the existing United States regulatory framework is ill-equipped to address the risks and conflicts of interest posed by benchmark-linked investing.
In this freely available 47-page report, we propose a path forward for investors and regulators to mitigate the conflicts of interest and risks of these products, while maximizing the benefits for investors, markets, and the economy.
About Healthy Markets Association
Healthy Markets is a not-for-profit association of institutional investors working together with other market participants to promote data-driven reforms to market structure challenges. Our members, who range from a few billion to hundreds of billions of dollars in assets under management, have come together behind one basic principle: Informed investors and policymakers are essential for healthy capital markets.