GIPS framework to promote ethics integrity & trust among investors in Mauritius IFC
As Mauritius moves towards becoming an International Financial Centre of substance and repute, one of its prime objectives as a financial centre is to uphold high standards, and, keeping this ultimate objective in mind, Global Finance Mauritius organised a half-day conference yesterday on Global Investment Performance Standards.
Global Finance Mauritius organised a half-day conference yesterday, Wednesday, 22 July 2015, with the objective of moving the Mauritian International Financial Centre (IFC) towards the adoption of Global Investment Performance Standards (GIPS).
Mauritius is moving towards the next stage of development in the financial services industry focusing on value addition and market diversification. In this context, is imperative that the island economyputs in place the right framework to govern and measure investment performance standards in the industry.
Iain McAra, Director of Global Investment Performance Standards, GIPS framework, explained the importance and the evolution of GIPS in the financial services industry.
Iain McAcra sketched an interesting background of the GIPS concept and how it can be expected to benefit financial firms by helping them measure performance and invest effectively. The guest speaker pointed out:“The latest preliminary estimates indicate that around 25 trillion dollars of assets are managed under GIPS compliance, which represents a quarter to a third of the total global assets under management.”
“The GIPS is a voluntary standard which governs the calculation and presentation of investment performance based on ethical principles that ensure fair representation and full disclosure of investment,” he noted.
Indeed, these international standards, according to Iain McAra, entail that companies adopt them on the same wavelength as well.
Furthermore, the application of these standards offers greater confidence to investors, as companies can display their financial information in an orderly way and present their investment performance in a transparent and effective manner.
The GIPS standard exists since 1999 and it appears that today, two-thirds of global investments are governed by these standards.
According to Iain McAra, GIPS includes several components which allow this framework to strengthen the financial services industry and guarantee more transparency. Promoting ethics, integrity and confidence by answering international demands are critical elements of the GIPS framework.
“These standards must be put in place to support investors and instil confidence in the financial services industry,” he says.
Considering the storm which shook the financial services industry, Iain McAra thinks that it is necessary to concentrate efforts towardsre-establishing investor confidence in this sector. For him, GIPS is necessary for several reasons — to counter lack of coherence in reporting, ensuring comparability in industry performance and complying with statutory directives.
To conclude, he considers it important to set up the GIPS framework to assure accuracy and coherence of information, to win global acceptance, to promote fair global competition among investment firms and to promote de-facto regulation of International Financial Centers.
- By Wazna Gunga, with inputs from Kashish Jadoo (Global Finance Mauritius)