
Investment management industry facing regulatory avalanche of disparate rules, says KPMG |
Date: Thursday, July 19, 2012
Author: Emily Perryman, HedgeWeek
In its fourth annual analysis of global financial regulations, KPMG says investment managers continue to face daunting challenges brought on by a changing global regulatory environment, which is fraught with unanswered questions and an array of differing rules in each region.
Observers, however, are beginning to see some consistency regarding the
implementation of new regulations across the globe, with the US and Europe
setting the bar and Asia catching up.
“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,” says John Schneider, head of KPMG’s investment management
regulatory practice in the US and a co-author of the report.
“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.”
In the US, investment managers have been dealing with new regulations brought
about by the Dodd Frank Act and other legislation, such as Advisor Registration,
Form PF and Cost Basis Reporting, all of which require new forms of disclosure
reporting and increased infrastructure needs.
The 54-page report, titled “Evolving Investment Management Regulation: A clear
path ahead?” examines the regulatory push in the investment management industry
in the US, Europe, the Middle East, Africa and Asia, and involves an alphabet
soup of government agencies and organizations. It says the “avalanche” of
regulations is the result of two common objectives being pursued globally:
protecting consumers and preventing another global financial crisis similar to
2008.
“Consumer protection and financial systemic risk mitigation are the driving
forces for regulatory change that are being applied consistently. 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,” Schneider says.
However, regulatory change may also lead to new growth opportunities for the
industry.
“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,” says Jim Suglia, head of KPMG’s investment management sector,
global advisory, and a lead editor of the report.
According to Suglia, regulators in the US will keep a diligent and close watch
as expanded registration, reporting and disclosure requirements continue to be
implemented. Investment managers representing private funds, money market funds
and new instruments will continue to be scrutinized with increased frequency and
intensity of examinations.
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