Challenges of the Financial
Corporations sub-sectors.
Joint WPFS-WPNA Workshop: SNA Implementation
Presenter: Dr Robert Dunn (Head of ESA 10 Implementation Branch)
Email: Robert.Dunn@ons.gov.uk
Tel: +44 1633 455347
Content
• The Financial Corporations sub-sectors within the
SNA & ESA
• Data Sources
• Challenges in the classification of Investment Funds
• Resident vs non-resident units
• Classification of REITs as non-MMFs Investment Funds
• Challenges in identifying Special Purpose Entities
• SPE activities
• Gathering data from SPEs
• As an Institutional Unit
Content
• Further Work
• Business Register Improvements
• Review of ONS Financial Surveys
• Further use of administrative data
Financial Corporations sub-sectors
within the SNA & ESA
• S.121
Central Bank.
• S.122
Deposit-taking Corporations except
the Central Bank.
• S.123
Money Market Funds (MMF)
• S.124
Non-MMF Investment Funds
• S.125
Other Financial Intermediaries
except Insurance Corporations
and Pension Funds
Financial Corporations sub-sectors
within the SNA & ESA
• S.126
Financial Auxiliaries
• S.127
Captive Financial Institutions and
Money Lenders
• S.128
Insurance Corporations
• S.129
Pension Funds
Challenges in the Classification of
Investment funds.
• Resident vs non-resident units
• Majority of investment funds are legally domiciled
overseas
• Fund manager located in London;
• Around 34 sterling MMFs identified with a total value of
c.£114bn, only one of which is legally domiciled in UK.
Challenges in the Classification of
Investment funds.
• Classification of Real Estate Investment Trusts as
Non-MMFs Investment Funds.
• REIT is a company that manages a portfolio of real estate to
earn profit for shareholders
• 1st January 2007 - Launch UK REITs
• REITs very tax efficient as company pays no corporation tax or
capital gains tax on profits from property investments.
• A number of property management companies convert into
REITs. (Is this a true change of activity?)
• Not directly supervised by the Financial Services Authority
(FSA).
• Under ESA/SNA REITs are classified as non-MMF investment
trusts
• Companies on Business Register classified to various
industries, all non-financial (S.11).
Challenges in Identifying Special
Purpose Entities.
• Activities of SPEs:
• Securitisation
• Risk sharing
• Asset transfer
• Property investing
Challenges in Identifying Special
Purpose Entities.
• Gathering data from SPEs:
• Identification
• Little physical presence
» Country of registration used to determine
residency.
• They have no or few employees
» Impacts survey response burdens.
» Grossing of survey results
Challenges in Identifying Special
Purpose Entities.
•
As an Institutional Unit.
•
Entitled to own goods and assets in its own right
•
Able to take economic decisions and engage in
economic activities
•
Able to incur liabilities on its own behalf
•
Able to draw up a complete set of accounts
Otherwise unit is consolidated with parent.
Further Work
• Business register improvements
• Coverage of SPEs
• Identifying relationships between fund managers and
investment funds.
• Segregating holding companies and head offices
• Review of ONS financial surveys
• Further use of administrative data
QUESTIONS?