Financial market integrity index

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The CFA Institute developed the Financial Market Integrity (FMI) Index to gauge the perceptions investment professionals have about the state of ethics and integrity in their financial services markets.

Specifically, the index measures the level of integrity that investment practitioners experience in their respective markets and the practitioners’ beliefs in the effectiveness of regulation and investor protections to promote such integrity.

The index is designed to track the evolution of this sentiment over time, and to signal which aspects of professional integrity and capital market systems are working well in a specific market, and which ones are in need of improvement.

2009 US FMI index results

Source: The 2009 US FMI Index Survey

Since the 2008 survey, the global markets in general—and the U.S. markets in particular have experienced the most difficult economic period since the Great Depression. Markets and market participants around the world have been affected by the growth in financial innovation, while risk management and regulatory practice have failed to keep pace.

This 2009 survey of sentiment concerning the U.S. market exposes the painful lessons investors have learned about risk and market excess. This index also reveals a continued decline in the perceptions that charterholders have about the ethical behavior of financial market participants and the effectiveness of regulatory and investor protections in the United States.

The global financial crisis that began in the United States has obviously soured those sentiments and shaken market participants’ faithin the ability of current U.S. investor protections to ensure an orderly functioning of the equity markets in the United States.

Although several of the key ratings for market professionals and regulatory systems and investor protections addressed in this survey were significantly lower than in 2008, some ratings dropped only slightly, suggesting that survey respondents were already pessimistic about the behavior of financial market participants and market systems a year ago.

The ratings concerning regulatory protections in the United States by those both in and outside the United States dropped the most from 2008 to 2009, signaling a desire among survey respondents to improve the current U.S. regulatory model—a model with disparate parts that many commentators have blamed for precipitating the current global financial crisis.


  • Of all those rated in the category of financial professionals, ratings for corporate boards and corporate executives dropped the most between 2008 and 2009, suggesting that respondents perceive these particular types of professionals to be most responsible for the current financial crisis.
  • Based on their perception of market ethics and integrity alone, only 49 percent (versus 68 percent in 2008) of in-market respondents were likely or very likely to recommend investing in U.S. markets. Those outside the United States responded comparably, at 43 percent in 2009 versus 67 percent in 2008.
  • The 2009 overall ranking of market integrity, at 2.8, down slightly from an overall rating of 2.9 in 2008, signals the growing need for improvements, primarily in the effectiveness of market systems and in the professional behavior of some market participants.
  • The open-ended comments that respondents provided in addition to their survey rankings overwhelmingly affirm that dissatisfaction with the country’s current regulatory model is the main area of concern.
  • The rating for hedge fund managers shows that they were perceived poorly again in the 2009 index. This low rating was coupled with respondent comments calling for more transparency from hedge funds.
  • In 2009, those outside the United States appear to have lost a significant amount of faith in U.S. market systems. In the 2008 survey, those outside the United States rated regulatory and investor protections higher than did those inside the United States; this perspective reversed in the 2009 survey.
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