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Almost half of investment managers in Canada believe the Covid-19 crisis will lead to unethical behaviour in the investment management industry, according to a global survey from the CFA Institute.

The survey found that 45% of Canadian CFA members said they were worried about an increase in unethical behaviour in the wake of the pandemic, while 26% were not. Twenty-nine per cent were neutral on whether Covid-19 would lead to a surge in misconduct.

“Of note, a majority thought that regulation of market conduct should not be relaxed in this crisis, which is a positive reflection of the ethical professionalism of the membership,” Olivier Fines, the CFA Institute’s head of advocacy for Europe, the Middle East and Africa, said in a release.

More than half of Canadian respondents said conduct regulation should not be relaxed to encourage trading and liquidity, and 71% said regulators should consult industry on how to respond to the pandemic.

Market liquidity was a concern for many respondents, particularly with regard to investment-grade corporate bonds. In Canada, 35% of respondents said they thought liquidity was down in corporate bonds, due in large part to central bank intervention. Only 30% of Canadian respondents thought liquidity had dropped in equity markets.

An overwhelming majority of respondents — 96% — said they thought Covid-19 would lead to asset mispricing, driven predominantly by liquidity dislocation (36%) and a distortion of market pricing due to government intervention (35%).

The majority of Canadian investment managers (almost 77%) said they were taking a wait-and-see approach before making changes to their strategic asset allocation. The remaining 23% said they have already made significant changes to their allocations.

The CFA Institute polled 13,278 of its members around the world between April 14 – 24, 2020. The results of the survey have a margin of error of +/-0.8%.