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Evolving Investment Management Regulation – Navigating opposing forces

Evolving Investment Management Regulation 2015

Investment managers are under strain due to the volume of new regulation and the tension asset managers feel when responding to policymakers.


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Bridge over the sea

On one hand, policymakers in many parts of the world are encouraging the investment industry to help drive economic and growth agendas. Yet on the other hand, asset managers are facing tough new restrictions by regulators who see the increasing size of the industry as a potential systemic risk. KPMG believes investment managers can capitalise upon new opportunities within this paradoxical regulatory environment if they focus on some key areas.

There is a significant opportunity for the industry to capitalise on economic growth agendas. In Europe, the investment industry is primed to contribute to the European Commission's 'jobs and growth' agenda through the Capital Markets Union, which aims to bring some of the vibrancy of the US capital markets and reduce Europe's reliance on bank financing.
Further, regulators are making changes to existing pension regulation and new products and tax-free saving accounts. The investment and fund management industry will benefit from more assets to manage and the opportunity to launch new fund-based retirement products.
Navigating opposing forces looks at the strain placed on investment managers due to the extraordinary volume of new regulation. Understanding and complying with so many new rules, some of which overlap or even conflict, requires significant resources and raises a number of business-critical decisions for firms.

Key insights

  • The spotlight created with the potential designation of the largest
    investment managers.
  • Regulators' focus on improving conduct and culture of investment management firms. 
  • Policymakers incentivising private investment to fund fledgling enterprises and physical and societal infrastructure. 
  • The flux in distribution has some barriers lowered and others are rising. 
  • The regulatory data challenge driving firms to build long-term data
    architecture strategy.

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