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The Geography of Investment Management Contracts: The UK, Europe, and the Global Financial Services Industry

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  • Gordon L Clark

    (Smith School of Enterprise and the Environment, University of Oxford, Hinshelwood Road, Oxford OX1 3QY, England and Department of Banking and Finance, Monash University, Caulfield VIC 3142, Australia)

  • Ashby H B Monk

    (Global Projects Center, Faculty of Civil and Environmental Engineering, Stanford University, Palo Alto, CA 94305-4121, USA)

Abstract

Contract is crucial for governing the relationships between asset owners and the many types of agents that underpin the production of financial services. We distinguish between discrete contracts for financial services and investment management contracts that are better described as relational in the sense that they are open ended and subject to renegotiation between the parties. Emphasis is placed upon the significance of risk and uncertainty in financial markets and the ways in which the parties to contracts adapt to these conditions. This provides the backdrop for understanding three different types of contractual arrangements apparent in the investment management industry, bringing to the fore the significance of the choice of jurisdiction when writing contracts for investment services. We explain how and why the UK is a favoured destination for European institutions just as offshore jurisdictions, such as the Cayman Islands, may be the favoured ‘home’ jurisdictions for certain types of UK and global investment managers. At the heart of the relationship between asset owners and asset managers is the power of these parties when choosing the type of contract and the jurisdiction which is the favoured location for formalising these relationships.

Suggested Citation

  • Gordon L Clark & Ashby H B Monk, 2014. "The Geography of Investment Management Contracts: The UK, Europe, and the Global Financial Services Industry," Environment and Planning A, , vol. 46(3), pages 531-549, March.
    • Handle: RePEc:sae:envira:v:46:y:2014:i:3:p:531-549
    DOI: 10.1068/a45658
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    References listed on IDEAS

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    1. Hachigian Heather, 2015. "Ambiguity, discretion and ethics in Norway’s sovereign wealth fund," Business and Politics, De Gruyter, vol. 17(4), pages 603-631, December.

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