Evolving investment management regulation: Navigating opposing forces
Since the financial crisis, an unprecedented volume of new regulation has been created and is now being implemented.

Although the intent has mainly been positive, the execution has been cumbersome and often with unintended consequences. Understanding and complying with so many new rules, some of which overlap or even conflict, requires significant resources and raises a number of business-critical decisions for firms.

At the same time, the industry is being pulled in different directions.

Policymakers in many parts of the world are encouraging investment managers to help nurture and drive economic growth. They are calling for initiatives that open up the capital markets as well as encourage savers to invest for the long term.

Firms, on the other hand, face further new rules and greater regulatory scrutiny. This is because the industry’s increasing size and breadth of activities are seen as a potential de-stabilizer in the financial markets. Regulators are also fretting about retail investors taking on too much investment risk.

Change will not be easy but forward thinking firms are engaging with the new environment. They recognise the need for positive dialogue with regulators and, most importantly, a focus on the fundamental purpose of the industry, which is to link enterprises seeking funds with helping people save and invest for the long term in an uncertain world.

This edition of evolving investment management regulation focuses on the regulatory pulls and pushes that the industry is facing. Some of the emerging trends include:

  • Closer scrutiny of investment managers and funds of all sizes
  • Regulators' are intent on improving the culture of investment management firms
  • Firms are expected to act unambiguously in the interests of their clients and deal with conflicts head on
  • Investment managers are being called on to facilitate capital flows into different types of assets
  • Many previously acceptable distribution practices are now unacceptable

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