Fund groups have let off a sigh of relief after the Financial Stability Board (FSB) proposed industry safeguards that are largely in place already, according to regulatory specialists.
Addressing structural vulnerabilities in asset management, the FSB made 14 proposals in June that were finalised last week. They included a request for regulators to collect information on funds’ liquidity profiles and were broadly supported by fund firms when the consultation launched.
“Most of the FSB recommendations are already in place,” said Sean Tuffy of Brown Brothers Harriman. “The industry will largely welcome the result.”
Julie Patterson, a regulatory specialist at KPMG, added: “I don’t think the UK or EU [funds industry] will be overly concerned.”
One proposal that may prove more severe is the suggestion that funds be subject to stress tests. The Bank of England has tested bond funds in the past but the FSB proposal extends to all asset classes.
Meanwhile one contentious concept, branding certain asset managers as “systemically important” and then imposing stricter requirements, has not been entirely abandoned, and could come under FSB consideration in 2019.
Angus Canvin, a senior adviser at the Investment Association, said there were no shocks but lamented the persistence of the systemically important definition.
“[The idea] is like a zombie, it keeps coming back to life.”
