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US, Europe Diverge On Asset Management Regulation

Regulation between the US and much of the rest of the world is diverging according to KPMG’s 2018 Evolving Asset Management Regulation report.

KPMG finds that while Europe and some ASPAC countries continue at a pace with implementing post-crisis regulations and proposing yet more legislation for asset management, the US is putting the brake on new regulations and withdrawing some rules for mutual funds. 

There is a common theme among supervisors, though.  Around the globe, they are increasing resources and harnessing new technology. Earlier this year, for example, the SEC signalled a growing number of visits to investment firms as it moves towards a “broken windows” approach; believing that minor violations can signal larger infringements. 

Julie Patterson, author and head of asset management regulatory change, KPMG, comments:

“Asset managers in Europe and Asia aren’t seeing any let-up in the volume of regulations they face, while the US takes a different path. A clear example of the diverging approaches can be seen in the debate on asset management and systemic risk.  Europe and ASPAC are following the 14 recommendations of the Financial Stability Board on liquidity management and leverage, whereas the US rejects the need for stress testing of mutual funds.

“Whilst for most regulatory bodies across the world, the twin peaks of financial stability and investor protection continue as priorities, a new theme is also emerging: competitiveness.  Regulatory barriers to cross border business are being addressed and new competitive fund structures are being introduced. 

“Asset managers will have to navigate an increasingly complex regulatory landscape for some time to come.”

Find the report online here: