Rethinking the “Buy-Side”: Shifting the Governance Focus Back to Institutional Investors

The regulatory responses in the major financial markets to the global financial crisis have largely followed the predictable path of focusing on the “sell-side” of securitisation bonds and other complex financial products. The investment banks and other promoters of these products have been subjected – in common with regulatory responses to previous financial crises – to an increased regulatory burden as to how they conduct their business. Less attention, however, has been paid to the extent to which institutional investors might bear some degree of responsibility for the losses suffered by them when allocating funds under management to complex financial products.