COMMENTARY – German regulators’ new securities trading disclosure rules are far too draconian, writes European Fund Focus Editor Bruce Love.
Remember those over-bearing school teachers that wanted to know your every move? You couldn’t talk to your classmates without permission. No running in the hall. And they wanted to know exactly what you were up to at any given moment. It was as if they expected every single student was going to misbehave and were determined to assert their authority.
Well it seems BaFin – the German regulator – has taken its lead from these draconian educators and wants to make the fund industry account for every single securities trade it makes. Imagine the burden this would put on your day-to-day life if, for instance, you had to keep a record of every single movement you made… every word you typed or every phonecall you took. It’s the sort of measure you would expect from a Dickensian novel, but not a modern regulator.
German-based funds already report their trading positions to the BaFin on a quarterly basis but to guard against abuses like insider trading, the regulator is insisting firms do this daily.
One could be forgiven for thinking they had walked into a classroom in the late 1800s.
And as well as the extra workload, some firms believe to be able to execute such persistent reporting would cost €90,000 to upgrade IT systems and another €60,000 a year to maintain them.
Thankfully German fund industry association BVI is putting the industry’s case forward to BaFin. It has already convinced the German finance ministry to delay the requirement until January 2006. And it thinks it can persuade Berlin to drop it entirely.
It is striking to think that the regulator is prepared to enforce such Kafkaesque measures when what is really needed is a lighter touch that would encourage more fund sales rather than impede growth. Let’s hope the BVI is convincing in its arguments.
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