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.