UK regulator flags stability risk of ‘very large’ asset managers

first_imgThe FCA’s comments echoed those made by the Bank of England – of which the FCA is a part – in 2014, when then-executive director for financial stability Andrew Haldane said it was viable to consider the risks to the wider economy of the collapse of an asset management company.The FCA also confirmed its plan to publish the final report into its asset management market study in the second quarter of 2017. As well as reiterating its findings from the market study, the regulator also highlighted other areas of concern, including asset managers overpaying for services and custody banks’ reluctance to invest in IT systems.Amanda Rowland, asset management regulation partner at PwC, said the regulator’s focus on liquidity management supported “broader operational concerns” linked to the UK’s imminent exit from the European Union. It also indicated that “some movement around enhanced stress testing and redemption disclosure is possible”, Rowland added.“While acknowledging that Brexit will require regulatory flexibility, the FCA has focused on asset management initiatives such as cost disclosure and liquidity management that have wider international support and will likely be successfully progressed regardless of where Brexit takes the UK and the FCA,” she said.In the immediate aftermath of the UK’s vote to leave the EU, several open-ended property funds were forced to temporarily close to redemptions due to a high level of withdrawals.Chris Cummings, chief executive of the Investment Association, the asset management trade body, welcomed the regulator’s approach and its willingness for industry dialogue. He added: “As we move into a post-Brexit world, it is vital that the UK regulatory framework continues to foster a globally competitive environment to set up and run an asset management business.” The failure or “disorderly wind-down” of one or several large asset managers could pose a financial stability risk to the UK’s system, the Financial Conduct Authority (FCA) has warned.Outlining its views of various sectors of the UK financial system as part of its annual mission statement and business plan, the FCA said: “Market stability could be affected by the failure or disorderly wind-down of a very large asset manager or several asset management firms as end-investors attempt to redeem their holdings on demand, creating a downward selling spiral.”In its business plan for 2017/18, the FCA said: “Following stakeholder feedback, we will review our policy options and the available tools that asset managers have to manage liquidity when facing redemptions and valuation issues, and assess how adequate they are in managing conduct risks and addressing financial stability concerns. This work should ensure that liquidity management in funds allows for a fair treatment of all customers, including those who remain invested, and does not amplify disruptions to the financial system in stressed market conditions.”International regulators such as the International Organisation of Securities Commissions and the Financial Stability Board have previously suggested treating large asset managers as systemically important, putting them at a similar regulatory priority level as the world’s biggest banks and insurers.last_img read more

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Nastase to be denied accreditation for French Open

first_img(REUTERS)-Former Romanian tennis player Ilie Nastase will not be given accreditation for this year’s French Open tennis, organisers said on Saturday.The 70-year-old is provisionally banned from all International Tennis Federation (ITF) events after making allegedly racist and sexist comments during Romania’s Fed Cup tie against Britain last month.“Following the decision of his suspension by the @ITF_Tennis, Mr. Ilie Nastase won’t be accredited for #RG17,” French Open organisers said on Twitter.Nastase, who courted controversy throughout his career during which he won the U.S. and French Opens, is also not welcome at this year’s Wimbledon championships.Romania’s Fed Cup captain was booted out of the tie against Britain last month for “unsportsmanlike” behavior.The singles rubber between Britain’s Johanna Konta and Sorana Cirstea was briefly suspended after remarks made by Nastase to Konta and British team captain Anne Keothavong.Nastase had already run into trouble during the World Group playoff tie in Constanta after making a derogatory comment about the unborn child of American Serena Williams, the 23-times grand slam singles champion.last_img read more

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