There are still uncertainties in the regulatory landscape for asset managers, according to a panel discussion at TSAM Europe in London.
One panellist began by pointing out that disruption in the industry is part of everyday life now, and that it “influences very practical matters”, adding that, where banking regulation leads, other industries tend to follow soon after.
Specifically, he pointed to the Trading Book Review, which could affect the cost of trading and portfolio allocation, as well as derivatives trading rules, which will make central counterparties (CCPs) a more important part of the banking infrastructure and therefore a greater risk if they were to fail.
Another panellist also expressed some concern over mandatory central clearing, saying: “We are concerned what might happen in a stress scenario, in a crisis, to clearinghouses.”
In such a scenario, he said, the first priority would be to save the CCP at all costs, and “unfortunately it’s the money of the investors” that might be put at risk.
A third speaker raised the issue of the financial stability agenda, which is influencing work on a global scale, saying “we face a fairly uncertain prospect” and suggesting that concerns still remain “more broadly from non-banks and non-insurers”.
He added, however, that while regulators initially tended to focus on the size of asset managers and their funds, regulatory processes are now “much more sophisticated and we welcome that”.
Regulations should consider markets more holistically as “an ecosystem of all players”, considering what regulation for all players could mean for wider-reaching financial stability, he said.
Responding to a question about unforeseen consequences of the regulatory agenda, one of the panelists said that he hasn’t necessarily seen anything unexpected. He said: “The good thing is that the authorities are now beginning to think about the cumulative impact.”
Another added: “Regulators are far more joined up than they used to be,” although he continued to say that both regulators and institutions are still in siloed models, and “we always will be”.
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