A Study on the Regulation of the Investment Advisers and the Financial Promotion Regime
Date Issued
2010
Date
2010
Author(s)
Chiang, Chia-Yi
Abstract
With development of the financial environment, the Financial Supervisory Commission under the Executive Yuan, R.O.C. was established on July 1, 2004 as the single regulator to satisfy regulatory requirements. However, the financial supervisory regime of Taiwan, including the regulation of investment advisers, has remained institutional. It has resulted in inefficient and inappropriate supervision, such that different activities with diverse regulatory considerations and requirements are encompassed in one single regulation. Moreover, inconsistent regulation also results as a consequence of applying different regimes to similar activities based on different businesses. Although the Regulations Governing the Management of the Securities Investment Trust and Consulting Association has defined the parameters of investment advisers quite broadly, various requirements have been proposed regarding the regulatory subjects and regulatory objects.
In the U.S.A., the Investment Advisers Act of 1940 has defined the parameters of investment advisors as broadly as Taiwanese law; however, it has also included several exclusions to narrow its scope of regulation. For instance, the exclusion of bona fide publications has limited the scope to personalized services. Additionally, the regulatory subjects and objects are more flexible and extensive.
The financial supervision of the U.K. is functional. Both financial institutions and financial regulation have been integrated. Personalized services of the investment advisers can be categorized in the regulated activities listed in the RAO and thus regulated by the general prohibition of the FSMA 2000. Conversely, non-personalized services often fall into the regulation of the financial promotion regime. The activities that the investment advisers in Taiwan can engage in are expanded to financial promotion activities.
Considering the disparity between personalized services and non-personalized services, it is arguable that we should separate the regulation of the two services in order to conduct functional supervision. However, both personalized services and non-personalized services are often provided together, and thus distinguishing one from the other is not feasible. Since both services virtually share the similarity that they have advisory effects on investors, integrating the regulation of both services is possible.
Finally, whether or not the enactment of the regulation of both services is separate or integrated, differentiating the contents and extent of conduct rules based on the character of different activities is necessary.
Subjects
financial supervision
investment advisers
financial promotion
freedom of speech
fraud
fiduciary duty
suitability
SDGs
Type
thesis
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