An International Organization of Securities Commissions decision that a review of asset management activities and products should take precedence over further work on systemically important designation for money managers has been welcomed by the industry.
The IOSCO announced Wednesday its board had decided that a full review of the activities and products of money managers should be “the immediate focus of international efforts to identify potential systemic risks and vulnerabilities,” said a notice on the organization’s website.
IOSCO has been working with the Financial Stability Board to establish methodologies to identify and designate certain money managers as systemically important financial institutions. The activities and products review will take precedence over further work on these methodologies.
“After the review is completed, work on methodologies for the identification of such entities should be reassessed,” the notice said.
The move was welcomed by the Investment Company Institute, an association of regulated funds.
“We strongly commend the IOSCO board for its conclusion that ongoing international regulatory efforts to address systemic risk should focus on activities and products in the asset management sector, and that this should take precedence over development of methodologies for designation of entities as systemically important,” said Paul Schott Stevens, ICI president and CEO, in a news release.
“As we have said repeatedly, asset management is a diverse enterprise, and effective risk mitigation in this area requires consideration of activities that are sector-wide. IOSCO and its member securities regulators, including the U.S. Securities and Exchange Commission, have the requisite experience and expertise to lead this effort. We look forward to assisting in IOSCO’s review as it examines regulated funds and their managers,” Mr. Stevens added.
A spokeswoman for IOSCO said the decision was made Tuesday, and no further details were yet available.
