Crisis of credit explained

This is a brilliant explanation and visualization of the crisis of credit

Part I:


Part II:

Financial Market Integrity Index

The Financial Market Integrity IndexTM gauges CFA charterholders’ perceptions of the state of ethics and integrity in six different markets around the world and how these perceptions change over time. The Financial Market Integrity Index measures the level of integrity — the ethics of market participants and the effectiveness of market systems in ensuring market integrity — that CFA charterholders experience in their respective markets.

This input from investment professionals helps raise awareness of leading issues and informs our work in conducting regulatory outreach and developing professional standards.

Explore this Topic: 
2010 Financial Market Integrity Index Methodology (PDF)

2010 Financial Market Integrity Index Reports and Highlights 
Canada 
Greatest concern: Effectiveness of the Canadian regulatory model. 
Germany 
Greatest concern: Supervisory board system. 
Hong Kong
Key concern: Better policing of insider trading in Hong Kong market. 
Japan
Top concern remains: Corporate governance and shareowner rights among investors both inside and outside Japan. 
United Kingdom
Greatest concern: Integrity of financial advisers. 
United States
Greatest concern: US Regulatory System.

BROKER'S WORLD CANADA: Advisers Ranked Low on Ethics

TORONTO (Dow Jones)--Financial advisers in Canada are not very well-regarded when it comes to ethical reputation, according to a recent survey.

In the Canada 2010 Financial Market Integrity Index released by the CFA Institute, financial advisers received a 3.1 score for ethical behavior, which is seventh among nine groups of financial professionals. This year's score was a slight improvement from the 3.0 score in 2009 and 2008.

Canadian financial advisers received the same ethics score as their U.S. counterparts, except that the advisers on the other side of the border placed third from the top on ethical behavior of financial professionals.

Among the other professions surveyed in Canada, pension-fund managers got the highest score, at 3.9; buy-side analysts scored 3.6; corporate boards of public companies, 3.4; mutual-fund managers, 3.4; executive management of public companies, 3.3; private equity managers, 3.2; sell-side analysts, 3.0; and hedge-fund managers, 2.8, which was the lowest.

The survey in Canada was answered by 576 Canadian market players in the financial sector, 5% of whom are financial advisers.

Survey respondents most often cited the ethical behavior of financial advisers as cause for concern. The comments on retail brokers' ethics ranged from a lack of training or knowledge to inherent conflicts of interest, particuarly the inability of advisers to balance profit motives with clients' interests.

"We've heard similar comments in other markets," said Matthew Orsagh, director of capital markets for the CFA Institute. In the U.S. for instance, causes of concern focused on conflicts of interest, adviser incentive/compensation structures, and the suitability of investment advice given by advisers. "The complaints are similar -- advisers need to be more transparent about fees," Orsagh said.

What's unique to Canada is the respondents' concerns about the absence of a single fiduciary standard, which mainly stems from not having a single securities regulator.

Canada currently has 13 securities commmissions, one for each Canadian province and territory. Finance Minister Jim Flaherty last month unveiled proposed legislation for the creation of the Canadian Securities Regulatory Authority. The Supreme Court of Canada will decide whether such a move is constitutional. Alberta, Quebec, and Manitoba don't support the proposed creation of a national regulator.

"The 'one regulator' issue is taking a lot of people's energy," Orsagh said.

On the rosier side, respondents both in and out of Canada agreed that the overall integrity level of financial professionals here was above average and deserved a rating of 3.5.

For the outsiders, the improvement was most significant in the perceived effectiveness of Canada's corporate-governance standards, moving to 3.4 in 2010 from last year's 3.1.

Canadian financial professionals, on the other hand, are far more willing to invest in domestic securities now than at any time in the past three years.

(Evelyn Juan writes about financial advisers and their jobs, with a particular focus on the challenges and regulatory issues facing the brokerage business as it moves from a transaction-oriented model to wealth-management financial advising. She can be reached at 416-306-2025 or by email: evelyn.juan@dowjones.com.)

TALK BACK: We invite readers to send us comments on this or other financial news topics. Please email us at TalkbackAmericas@dowjones.com. Readers should include their full names, work or home addresses and telephone numbers for verification purposes. We reserve the right to edit and publish your comments along with your name; we reserve the right not to publish reader comments

(source: http://online.wsj.com/article/BT-CO-20100611-708043.html?mod=WSJ_World_MIDDLEHeadlinesAmericas)

CFA Exam Draws Record 139,900 as Asia Applicants Increase 12%

By Michael J. Moore

June 2 (Bloomberg) -- A record 139,900 candidates enrolled for the Chartered Financial Analyst exam in June, an increase of 9 percent from last year as applicants seek a hiring edge in the recovering financial-services industry.

The number of registrations rose 12 percent in Asia, 9 percent in Europe and 5 percent in the Americas, the Charlottesville, Virginia-based CFA Institute said today in a statement. The first level of the exam is in December and June; the final two levels are administered only in June. Fewer than half the applicants at each level passed last June.

Candidates take the test hoping the certification can lead to better jobs, higher salaries and a deeper understanding of finance. Financial firms worldwide have cut more than 346,000 workers since the credit crisis began in 2007, according to data compiled by Bloomberg. U.S. banks posted their highest profits in two years in the first quarter, the Federal Deposit Insurance Corp. said last month.

“At this time of global economic instability, we believe it is especially important for the investment industry to be led by professionals who put investors’ interests first,” John Rogers, chief executive officer of the CFA Institute, said in the statement. “Finance markets cannot function effectively without ethical behavior, and transparency, and CFA charterholders are integral to this.”

Candidates from 160 countries are scheduled for the three levels of the exam. Forty percent of registrations for the test in June come from Asia, according to the CFA Institute statement. Applications from China climbed 19 percent to 15,700. India had the largest increase, 39 percent to 11,800. The U.S. had the most registrations with 38,200, up 3 percent from a year earlier.

The Topics

There are about 88,700 CFA charter holders globally, according to the organization’s website. The not-for-profit CFA Institute said candidates spend an average of 300 hours studying for each phase of the test. Topics range from ethical standards and securities valuation to financial statement analysis and portfolio management. Completing all three levels costs about $2,500 and takes an average of four years.

The CFA program started in 1963 and stems in part from Benjamin Graham, a pioneer of value investing who mentored Warren Buffett and advocated a rating system for financial analysts.

--Editors: William Ahearn, David Scheer

To contact the reporter on this story: Michael J. Moore in New York at mmoore55@bloomberg.net.

To contact the editor responsible for this story: Alec McCabe at amccabe@bloomberg.net
(source: http://www.businessweek.com/news/2010-06-02/cfa-exam-draws-record-139-900-as-asia-applicants-increase-12-.html)