Asset managers worldwide face 'avalanche' of regulation
20 Jul 2012
Differences between the changing regulatory regimes around the world are still causing big problems for investment managers, according to a report by KMPG.
But the advisory firm also found early signs of similarity emerging between the new rules being implemented in different countries.
John Schneider, head of KPMG's investment management regulatory practice in the US, said: "We are beginning to see progress toward more consistency with regard to global regulations, but there still remains disparity in the regulatory requirements across the regions.
"The goal is to reach a global connectiveness and consistency as to how regulations unfold, which is critical if we are to make sure the competitive landscape is not significantly altered."
Investment managers in the US have been dealing with new rules arising from the Dodd Frank Act and other legislation, such as Advisor Registration, Form PF and Cost Basis Reporting, KPMG said.
All of these require new forms of disclosure reporting and increased infrastructure, it said.
According to the report, the "avalanche" of regulations in Africa, Asia, Europe, the Middle East and the US stem from two common objectives being pursued around the world.
"Consumer protection and financial systemic risk mitigation are the driving forces for regulatory change that are being applied consistently," said Schneider.
"And while there have been delays in implementing many of the regulations on a global basis, taking the extra time has contributed to making them stronger and more workable."
Despite the problems the mix of new regulation pose, regulatory change could also lead to business growth for investment managers, by increasing transparency and inspiring trust, the report found.
Jim Suglia, head of global advisory at KPMG, said: "While there is significant pressure on the investment management industry today from individual and institutional investors for more transparency, this could very well lead to more opportunity for growth as investors' confidence is strengthened."
The result of US regulators keeping a diligent and close watch on disclosure and other requirements could be positive as certain investment instruments become much more clear to investors, he said.
Author: Rachel Fixsen