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Markets and Securities Services |
International
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Asset management is a global business, and the
firms participating in delivering such services and
operating funds do so globally. Global regulation
has not always been with us. The last millennium
was characterised by an ever-increasing adoption
of models of regulation across nations joining
IOSCO, often adopting US or more latterly UK/
EU templates.
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At first national policy dynamics
were about what should be regulated and
how. Now that most nations have introduced
comprehensive regulatory regimes, the policy
dynamics are now as much if not more at the
level of the regulators since they broadly share
the same high-level responsibilities, those of
consumer protection, prudential strength and
financial stability.
This article reflects a realisation about what
happens when regulators work with each other
more. Some readers will have got this long ago,
but it is now widely understood from experience
of talking with firms and regulators in the US,
Canada and Japan during 2016 that global
regulation for firms is no longer merely about
what rules one needs to comply with to carry
on business outside your home territory: it is
also the study of what ideas may be imported
to your home territory from outside. The US
Department of Labor, Canada’s securities
regulators and Japan are all exploring local
initiatives on duties of care, commission bias
and better cost disclosure, whose paradigms can
all be traced to the UK’s RDR.
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This is not to say
that there is an unquestioning acceptance of
an idea from another regulator. But it is a claim
that if you want to plan for future regulation
in the USA, for example, it is no longer safe to
ignore ideas that are emerging in Europe.
So this article speculates on what ideas, what
new paradigms of regulation even, might excite
the interest of regulators in other countries.
Of course, not every country will take the
same approach, and some countries will not
constitutionally alter the roles of its regulators.
But in asking what the next 10 years might
bring, this article, which takes an unashamed
view from the UK outwards in several examples
(not least because of the article’s provenance
where the UK regime is perhaps better
understood), hopes to show how such ideas
make sense and, got right, can potentially
improve the cost-effectiveness of regulation.
Time for stocktaking
In the years since the Lehman collapse, we have
become so engaged with some subjects and
organisations that it is hard to believe they are less
than eight years old. A few of such topics include:
Financial Stability Board — financial
stability as a non-banking theme
Financial Conduct Authority (FCA)
— having competition powers
The real economy — distinguishing
most other parts of the economy
from financial services
Some themes are longer-standing — consumer
protection has been at the centre of regulation
since the modern era of UK regulation commenced
on 28 April 1988, itself hugely influenced by 50
years of US regulation beforehand. So it is with
consumers that our forward look begins.
THE DIRECTION OF ASSET
MANAGEMENT REGULATION INTO
2020 AND BEYOND: WHAT MIGHT
THE FUTURE HOLD?
This article considers what direction regulation, in particular of asset
management and the services around it, might take into 2020 and beyond.
While past performance may not be an indicator of future performance in
investment, when it comes to regulation, a consideration of the immediate
past and present should help identify some of the major trends.