The UK's Investment Management Association (IMA) has reminded the European Securities and Markets Authority (ESMA) that asset managers are not banks, and should not be treated as posing the same systemic risks.
IMA Members presently hold some 34% of the UK stock exchange capitalisation. They use MTFs, brokers, algorithms, clearing members and more and more will be involved with CCPs (Central Counterparty Clearing Houses); and their clients engage custodians with which managers need to cooperate.
“Never before have firms had to be so concerned with how others are implementing changes in legislation. Terms being offered by clearing members need to be scrutinised to see they preserve the segregation and porting rights which clients wish to have.
“Bank recovery and resolution plans can easily forget the critical role some of their services play in the operation of the funds industry and we need to ensure that these are addressed alongside more obvious core services to payments and retail deposit taking.”
He said regulations have proved “exceptionally poor” at addressing complex chains of activity and responsibility.
“Who is responsible for what, between manufacturer, wholesaler, distributor and consumer? The regulations will not address this adequately, and the UK has never resolved what it means by consumer responsibility. So we still need to ask what are our true roles and responsibilities quite apart from what the regulations state?”
He said the reference of some commentators to a “fiduciary” duty is not an adequate response, as it lacks a sound legal underpinning. Regulatory proposals were failing to take account of layers of operational connections, messaging languages and reference data and standards among firms.
“Financial service regulations rarely if ever descend into the technical language needed to ensure operational efficiency and even to allow regulators to see more easily what is occurring.”