Institute for Financial Transparency

Shining a light on the opaque corners of finance

Who Should Use the Label

Given the label’s division of the global financial system, the label can be used in a number of different ways including the following:

  • Investors can use the label to restrict or eliminate both blind gambling in their investment portfolio and investing in rigged markets.
  • Mutual funds can use the label to tell investors they don’t blindly gamble with the investors’ money as they restrict their fund managers to investing only where the label is present.
  • Financial advisors can use the label when constructing an investment portfolio.  For example, a widow might ask for ‘safe’ investments.  By definition, securities with a label are ‘safe’ to the extent that they offer the necessary transparency so their risk can be assessed.  Buying securities without the label isn’t ‘safe’ as this is doing nothing more than blindly gambling.
  • Global financial regulators can build the label into capital requirements so any investments made by regulated financial institutions that don’t carry a label must be funded primarily with equity.
  • Sovereign wealth funds, public pension funds, foundations and endowments can build the label right into their criteria for eligible investments. After all, there is no reason these organizations should be blindly gambling on securities without a label or transacting in rigged markets.
  • Central banks can limit the securities they buy or what they accept as collateral for a loan to only those assets that carry a label.  After all, there is no reason for central banks to be blindly gambling with taxpayer money.