The International Organisation of Securities Commissions (IOSCO) – the umbrella group for market regulators – has dampened plans to categorise large asset managers as systemically important by calling for an alternative review of the market.

IOSCO has previously been working with the Financial Stability Board (FSB) on its consultation on whether non-bank non-insurer (NBNI) financial institutions such as asset managers and pension funds are systemically important to financial markets.

Switzerland-based FSB is an organisation of financial market policymakers and central bankers, chaired by Bank of England governor Mark Carney.

However, an outcome of the IOSCO conference in London was chairman of the board Greg Medcraft proposing a full review of asset managers in a global financial context.

This – and not other measures – should be the immediate focus, he said.

He said this review should take precedence over other work being done on identifying systemically important asset management firms, meaning the FSB’s plans should be shelved until further notice.

“A full review of asset management activities and products in the broader global financial context should be the immediate focus of international efforts to identify potential systemic risks and vulnerabilities,” Medcraft said.

“After the review is completed, work on methodologies for the identification of such entities should be reassessed.”

There are several members of IOSCO who also sit on the FSB, which means that, should this be a universal IOSCO view, discussions to enforce capital buffers on systemically important asset managers could be shelved.

In what some perceive as a rejection of the FSB’s view that asset managers are systemically important and thus need additional regulation, IOSCO said it now wanted to use the review to see whether there was a problem before working out a solution to the issue.

Views coming out of IOSCO on the systemic risk debate will be welcomed by the asset management industry, which strongly opposes the notion of systemic importance based purely on assets under management.

As the FSB consultation closed earlier this month, the world’s largest asset manager, BlackRock, condemned the FSB’s blanket approach to looking at AUM.

The manager said AUM metrics would create false positives and false negatives.

It also argued that, given the transmission channels identified for analysis by the FSB, leverage should be used as a basis over AUM, should the FSB insist on moving forward.

Within the latest consultation, on which the FSB will report back on by the autumn, pension funds were excluded from being classed as systemically important.

BlackRock, Vanguard and asset management umbrella groups argued pension funds should not be excluded given that the firms were agents for investors.

They said the FSB should take a more holistic view of the investment management industry.