The president and CEO of the Investment Company Institute (ICI), Paul Schott Stevens, has criticised the Financial Stability Board’s (FSB’s) second consultation on classifications for global systematically important financial institutions (G-SIFI).
Schott Stevens said that the latest consultation on methodology to assess investment funds and asset managers for designation “appears to take a giant step backward”.
He added that the FSB “appears to have discounted key aspects to the extensive record placed before it”.
The changes would mean tighter regulations for systematically important firms, of those that are considered ‘too big to fail’.
According to Schott Stevens, the first consultation led to suggestions that designating regulated US stock and bond funds as G-SIFI would be “unnecessary and inappropriate”.
The new consultation, however, still singles out regulated funds as candidates for designation and retains an emphasis on the size of the fund with regards to designation.
It also adds additional criteria to include large asset managers. Schott Stevens suggests that this appears to target large US firms.
He said: “G-SIFI designation of regulated funds would harm these funds, their investors, the overall fund marketplace, and fund investing and capital markets at large.”
ICI intends to file a comment letter on the consultation by the 29 May deadline.
