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  • Since the Financial Crisis, markets have slowly but inactuably been changed by regulation.

  • What does it mean for one of the market's biggest actors, asset managers?

  • With me to talk about it, is Arjun Singh-Muchelle, Senior Advisor in capital markets at the Investment Association.

  • Arjun, welcome. -Thank you.

  • So what is the cumulative impact of all these layers of regulation?

  • Well in so far as the buyer side is concerned, there are, there been two unintended consequences.

  • One in regards to monetary policy, and the low interest rate environment.

  • If you look at from 2007-08, once interest rates had gone down, that we on the buyer side, had record sales of fixed income funds.

  • So we've been increasing our holdings of corporate bonds and sovereign bonds and so on.

  • But, one of the other unintended consequences of prudential regulation placed upon banks

  • has led to a de-risking and a de-leveraging of bank balance sheets, precisely in corporate bonds and sovereign bonds.

  • So this had led to an asset class mismatch between the buy side and the sell side.

  • If it's becoming a bigger part of the market earning more revenues from it, this has, by definition, make the industry systemic.

  • It's always important to recall that the revenues generated by some managers and markets are not revenues for asset managers, they are returns generated by our clients.

  • Revenues generated by some managers come from the sales of funds.

  • Now, the systemic question as institutions and businesses, asset managers are not systemic.

  • And the reason for that is, if you look at the balance sheet of an asset manager and compare that to the balance sheet of a bank,

  • a bank's balance sheet is normally a multiple of an asset manager's balance sheet.

  • And the reason is that the assets managed by an asset manager do not sit on our balance sheet.

  • They are held in segregated accounts by a custodian.

  • And what that means is that were an asset management company to go down, a client's assets would never be touched.

  • That does not mean to say that we do not bring any sort of risk as any economic agent of financial markets, we bring a certain element of risk.

  • But, those market-based activities are, or will be, mitigated by a method going forward,

  • and smooth the other areas globally will that regulators are looking at of course, is where that you can never run on a fund.

  • I used it to the great European success story and one of the tools provided and uses is to manage a redemption.

  • Now, if the banks are actually moving out of the market, they're becoming a bigger part of the market.

  • There's opportunities there to maybe participate directly, maybe with a counter party, and bypass that intermediary.

  • But what are some of the trade offs here?

  • One of the bigger trade offs that we've seen in the financial markets is of course, market data.

  • What this assumes is that there's a quality of access to market data and the quality ability to pay for market data.

  • Now if you use the equity market as an example, the price for market data had been rising for a number of years now,

  • where the revenue generated, for example, by the London Stock Exchange, from market data non-transactional services is now a greater proportion that it's ever been previously.

  • Now if this model was applied to fixed income, this would increase frictional costs for asset managers,

  • which have a direct impact on the revenues that we can generate for our clients.

  • Arjun, thank you very much. -Thank you.

Since the Financial Crisis, markets have slowly but inactuably been changed by regulation.


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ポスト危機時代の資産運用|FTマーケッツ (Asset management in the post crisis era | FT Markets)

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    Kristi Yang に公開 2021 年 01 月 14 日