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Mutual fund revolution: EC wants them to be guaranteed like banking deposits

Autor: Roxana Pricop

08.02.2011, 23:50 13

The European Commission wants to include mutual fund investorsin compensation schemes, proposing damages of as much as 50,000euros for each client that suffers losses. However, European statesare against such a move, under the pressure of fund managers andbanks, fearing that such a scheme for funds would generate highcosts.

Romanian mutual funds have over 220,000 investors, with 100,000having entered in the past two years, placing their moneyparticularly in currency funds, which have been promoted by banksbundled with deposits.

Bourse investors, 86,000 overall, are protected by theCompensation Fund in case the broker with which they opened thetrading account failed, while banks' clients have over 15 milliondeposits and current accounts guaranteed within the limit of100,000 euros.

The gap is the wider as mutual funds address small, retailinvestors, and in Western countries they are as popular asinvestments on the Bourse.

Domestic market official sources maintain such a protection move"is not justified as the Romanian capital market legislationguarantees mutual funds' assets are kept separately from bankingdeposits and are not part of the list of liabilities in case ofbankruptcy".

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