Regulatory bodies establish rules in designated industries to monitor equity concentrations in order to protect sectors from undue outside influence. Key industries include banking and insurance, defense, mining, media, aerospace, and gaming. Investment management firms are duty bound to comply with all regulatory limits. Challenges include:
With increased trade protectionism and rules tightening brought on by Covid-19, sensitive industries investment rules are becoming more stringent and multiple regulatory bodies often create complex and overlapping rules.
There is no standardized rule set that firms can reference across industries and jurisdictions.
To monitor their holdings accurately, firms must solve the industry-classification challenge by uncovering sensitive industries embedded in a target investment’s parent-subsidiary corporate structure.
Furthermore, firms need access to granular industry classification data to ensure mandated rules are correctly applied.