A trade group representing U.S. asset managers is stepping up its fight against efforts to designate major money managers and hedge funds as systemically important, which would bring added regulation.
The Asset Management Group (AMG) of the Washington, D.C.-based U.S. Securities Industry and Financial Markets Association (SIFMA) on Thursday called on global policymakers — the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) — to abandon their efforts to create a systemic risk methodology for asset managers and funds. Earlier this year, they launched a second round of consultations on the subject.
“This second consultation does not reflect the avalanche of empirical studies and substantive comments that highlight how asset managers and investment funds do not present systemic risk, making G-SIFI designation at the entity level ineffective at best,” said Timothy Cameron, managing director and head of SIFMA AMG, in a news release.
“SIFMA AMG is concerned that the second consultation could lead to increased costs and other negative consequences for investors and capital markets without actually addressing any systemic risk concerns,” he added.
The FSB and IOSCO should instead focus on asset management products and activities, SIFMA AMG argues. It maintains that this approach “would better reflect the nature of the asset management business”; and that this would better align with efforts by other regulators, including the U.S. Securities and Exchange Commission (SEC).
“These national and international regulatory initiatives to assess asset manager products and activities should be evaluated in detail before FSB/IOSCO can reasonably conclude that any additional regulation is warranted,” SIFMA AMG says.
SIFMA AMG is “encouraged by recent comments by FSB chairman Mark Carney that seem to suggest FSB/IOSCO may be shifting their focus in this direction” Cameron noted.
“We hope that FSB/IOSCO will proceed in a coordinated manner, facilitating harmonization of policies and sharing information rather than focusing on needless and potentially harmful designations,” he concluded.
SIFMA’s Asset Management Group is primarily comprised of U.S.-based asset management firms with combined assets under management exceeding US$30 trillion.