IIN's Kathryn Saklatvala writes
Followers of the Sovereign Wealth Fund space will be acutely aware that - for much of the past decade - a variety of bodies, commentators and experts have advised these entities to be as transparent as possible. Doing so, they are told, should maximise the ease with which they can invest in foreign markets. The principle: greater transparency on holdings and investment objectives will increase the comfort of regulators, governments and related bodies, making them more receptive to (and supportive of) your investments in their countries.
If you want a high score on the "Linaburg-Maduell Transparency Index" or the NRGI's "Resource Governance Index" or any number of other scorecards devised to rate and rank SWF transparency, open up. Even the IMF's 2008 Santiago Principles have often been misinterpreted as suggesting that SWF signatories should be wholly transparent on their investments, although that is not in fact the case (a point I tried to stress in my BBC interview a couple of years ago on this topic). Many of the world's leading pension funds do not provide the level of transparency on their investments that the commentariat often seem to demand from SWFs.
It is therefore wonderfully ironic to note the reason for the Financial Stability Board's decision (announced last week) to exempt SWFs and Pension Funds from their long-awaited study on systemic risks from financial institutions that are not banks or insurers, i.e. asset managers. The report, due this week, should include recommendations on new policies and rules to curb those risks.
Why are SWFs and pension funds escaping (for now) from what could be a pretty costly net? Here's what the Financial Times had to say:
"The FSB ... had initially planned to include sovereign wealth funds and pension funds but those two groups have been dropped because of problems collecting data, according to people familiar with the situation."
Brilliant.
Read in the FT here
Read in Enterparse here