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Byline: Nick Rice
As they convene this summer to debate the content of Ucits IV, what can European fund regulators learn from their peers in the banking sector?
To restate widespread regulatory convictions for the sake of comparison, banks should be told to borrow less, and at rates that keep asset prices, not just High Street prices, stable. In case they are unable to service the interest payments on these loans through their investments, they should be forced to retain a greater proportion of their profits in cash and pay out less to employees and shareholders.
Any profits reinvested back into banks should be channelled into regulated products or businesses. To take an example from the institutional side, all derivative transactions should be cleared so any liabilities resulting from them can be properly monitored. To take another from retail, consumers should not be sold products such as variable-rate mortgages that require ...
Source: HighBeam Research, The learning curve.