Underlying the global financial system is a basic quid pro quo.  Investors get transparency in exchange for assumption of all risks related to their investments.

The idea is investors can use the disclosed information to assess the risk of any investment and know what they own or are thinking of buying.  Furthermore, by doing this assessment, investors can limit their exposure to the investment to what they can afford to lose.

In order to limit disclosure, the Opacity Protection Team likes to claim that too much disclosure confuses investors.

However, there is nothing in the design of the global financial system that requires investors to do their own analysis.  Investors are free to hire trusted third party experts to do the analysis for them.

For example, investors can hire portfolio managers.

Recently, the EU took steps to increase investors access to trusted third party experts.  Specifically, the EU mandated that banks charge for investment research they produce.

It turns out investors don’t want to pay for this research.  Instead,

Independent research firms are steadily growing, reflecting their capacity to produce analyses at a considerably lower cost than major sell-side brokerages, Hong Kong-based Quinlan & Associates said.

The growth in these third party research firms fuels the need for higher levels of disclosure at the same time as it gives investors greater access to expert assessments of the risk of any investment.