Promoting Competition in the Distribution of Mutual Funds : Lessons for Securities Markets Regulatory Authorities in Emerging Market Economies
This Policy Note focuses on distribution channels, the role they play in product diversification and costs, and how regulation can promote competition in mutual funds (MFs) distribution. In many emerging market economics (EMEs) where both the capit...
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| Language: | English |
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World Bank, Washington, DC
2018
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| Online Access: | http://documents.worldbank.org/curated/en/739951533672034745/Promoting-competition-in-the-distribution-of-mutual-funds-lessons-for-securities-markets-regulatory-authorities-in-emerging-market-economies http://hdl.handle.net/10986/30312 |
| Summary: | This Policy Note focuses on distribution
channels, the role they play in product diversification and
costs, and how regulation can promote competition in mutual
funds (MFs) distribution. In many emerging market economics
(EMEs) where both the capital markets and the MFs have
reached certain level of development, distribution channels
are dominated by banks and their groups. This dominance in
turn allows them to keep a "closed architecture"
and to offer their clients only the products they
manufacture. However, different forces are opening the doors
to competition in the distribution channels including (i) a
higher level of development of the MF industry, anchored in
a growing middle class with additional savings to invest;
(ii) financial innovation, which has been supported by
demographics and the increased penetration of internet,
social media and mobile services; and (iii) regulatory
reforms, some of them explicitly aimed at increasing
competition. These forces are driving the emergence of new
distribution channels, particularly but not exclusively in
the form of electronic platforms which might enable retail
investors to access a wider variety of products, potentially
at lower costs, and robo-advisors, which can lower the costs
of accessing advice, potentially enabling retail investors
to be better informed. |
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