View more on these topics

FCA backs asset manager calls for ‘systemic risk’ rethink

FCA interior logo 620x430

The FCA says “big questions” need to be asked before asset managers can be branded as systemically important, following a consultation paper on the designation from the FSB.

Martin Wheatley, chief executive of the UK regulator, says asset managers should not be singled out and more thought needs to be put into the system, reports the Financial Times.

The consultation paper from the FSB seeks responses on the revised proposal to extend regulation beyond banks and insurance companies to other financial institutions and deem asset managers systemically important.

Instead, regulators should look to the markets in which asset managers operate and the liquidity flow within them, says Wheatley.

“I’d find it perverse if we ended up putting handcuffs on a set of players in markets — the asset managers — just because they’re regulated and we know them, and yet allow people on the lakeside in Switzerland and sovereign wealth funds in the Far East and central banks to play with free rein in those markets,” he adds.

Asset managers, such as Fidelity and BlackRock, and industry body the Investment Association have already protested against the proposals from the FSB.

The premise of asset managers being systemically important partly hangs on whether investors operate with a herd mentality, pulling their money en masse from managers in times of stress. Both the IA and BlackRock argue this is not the case.

BlackRock also says more work needed to be done to determine whether asset managers were in fact systemically risky, and the sources of such risk.

The IA has already released its response to the consultation, and claims that judging an asset manager’s systemic risk by looking at the firm or fund size is a “useless” approach.

Recommended

FCA logo new 3 620x430
4

Eight convicted in £4.3m Ucis fraud

Eight people have been convicted for their part in the operation of a Ucis that led to 110 investors losing £4.3m. The conviction is a result of the FCA’s Operation Cotton, one of the largest investigations ever run by the regulator. Five of the convicted individuals – Scott Crawley, Dale Walker, Daniel Forsyth, Aaron Petrou […]

Toxic-Waste-Hazard-Harazdous-Danger-700.png

Suffolk Life halts Sipp acquisition plans as director exits

Suffolk Life has stopped actively investigating acquiring other Sipp providers due to concerns it is too hard to weed out “unacceptable assets”. Strategic partnership director Chris Jones, who led the acquisition business, has decided to exit the company following the decision to focus on organic growth. The firm has made four acquisitions of Sipp back […]

Former Lib Dem leader Charles Kennedy dies

Former Liberal Democrat leader and MP of 32 years Charles Kennedy has died at his home at the age of 55. No cause of death has been announced, but police said it was not suspicious, the BBC reports. Kennedy became the youngest MP in the country when he was elected to the Ross, Cromarty and […]

UK-Currency-Money-Pounds-Notes-700x450.jpg

BlackRock hits out over regulatory clampdown

Asset managers are not a source of systemic risk and should not be regulated as such, says fund giant BlackRock in response to the FSB’s consultation on new regulations. BlackRock says asset managers “are fundamentally different from banks and other financial institutions” and therefore should not be subject to the same measures to control systemic risk. […]

Japan: mid-year review and outlook

By Chris Taylor, Manager of the Neptune Japan Opportunities Fund H1 2014 Economy: after a harsh winter that slowed activity in the economy, the main event of the first half of the year has been the debate over what impact the 1 April VAT hike from five to eight per cent would have; we are […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Martin Wheatley commented that “I’d find it perverse if we ended up putting handcuffs on a set of players in markets …..just because they’re regulated and we know them,” … “yet allow (non UK Regulated organisations I assume he means!) to play with free rein in those markets.”

    Well I’ve just been reading an article about the unfairness of FSCS levy and the same perversion is alive and kicking in that sorry arena and perpetuated by our august regulatory authorities. In that case we have the handcuffs put on us for those others who play free rein in our markets, to coin Mr Wheatley’s comments, with products and services most of us would avoid like the plague.

    If it’s a perversion in one case it must be in the other too! I’m not sure if someone who simply allows or condones a perversion is a pervert themselves, but it is food for thought.

Leave a comment