Regulation of sovereign wealth funds

Thesis

This thesis analyses the motivations, behaviours and outcomes of Sovereign Wealth Funds (SWFs), and the regulations pertaining to them. The motivation for examining these issues includes the growing role of SWFs as large investors in a wide range of global asset classes, their continued resistance to transparency, and the perceived lack of any unified regulatory framework to cover their activities. We consider the evolving attitudes amongst regulators, SWF officials, and independent analysts and commentators to the current and evolving regulatory environment for SWFs. Regulatory approaches include both mandatory and voluntary measures. Following a review of both the academic literature and other available materials on SWFs, we consider what type of regulation would seem both appropriate and proportionate for SWFs, and we evaluate the significance of the fact that although SWFs operate within frameworks similar to other alternative investment funds, their culture is inherently different.

We conducted fourty-three in-depth interviews, and compared and contrasted the various opinions regarding the current and evolving operation and regulation of SWFs. We followed these up with two country case studies, for Russia and China respectively. For these, we set out the background to their respective SWFs, and discuss the current and evolving state of their investment strategies and of the regulatory environments in which they operate. We consider in particular the extent to which SWFs may be pursuing geopolitical agendas, and on the other hand the degree to which they may be potential contributors to the public good, for example as a stabilising factor during global financial crises. We thus consider the impact on global markets of their investments – and the implications of the degree of transparency and accountability within which they tend to operate; and we explore the case for additional regulation of these entities.

We conclude, firstly, that greater visibility and control of SWFs would be desirable; and secondly, that a range of regulatory approaches and policies might prove appropriate in dealing with what are often rather different SWFs, often reflecting the outlook of their parent state. Thus, the Norwegian SWFs (Government Pension Fund Norway, and the Oil Fund) reflect the transparency favoured by that state; the Russian National Wealth Fund reflects the preference for secrecy inherent in the Russian state; while the activities of the China Investment Corporation match the breadth and high profile favoured by the Chinese state, albeit restricted by the controlling tendencies of the Chinese government.

Authors: Nacvalovaite, A

• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English