Since our firm’s establishment in 2005, we have been highlighting the need within the fixed income securities industry for an independent representative organisation for the Institutional Investor community. This is the conclusion of a recent presentation made to European regulators

An international representative body for Institutional Investors – what it might achieve

The function of such a body would be to assist investors to coordinate their efforts to ensure best practices in these complex markets and, in general, to identify deficiencies, as time goes on, in the development of new investment products and markets. The role of the global credit rating agencies should, in future be seen as an adjunct to, rather than a substitute for, the pro-active involvement of International Investors, supported by such a new body.

The primary initial functions of such a body might include:

To create a forum which would allow institutional investors drawn from EU member states to act in collaboration in order to:-

• work towards correcting the imbalances caused by the asymmetry of information prevailing between sell-side and buy-side institutions;
• to address the conclusions of the de Larosière Report regarding the need for "increased due diligence from the buy-side";
• to play its part in informing institutional investors as well as those tasked with supervision of the CRAs, as to how rating agencies should address, comprehensively, the real requirements of institutional investors from time to time, as new markets and products emerge and evolve;
• to commission, where appropriate, independent analysis of non-transparent risk within new products and markets as they develop

A new international representative body for Institutional Investors may have a chance to succeed and thrive if its primary function is to represent and further the interests of all those (i.e. the international Institutional Investor community) whose direct economic interests lie in the promotion of investment products and markets in which all (investment) risk and reward is capable of full, transparent and measurable analysis.