Recommendations to Address Structural Vulnerabilities from Asset Management Activities
SIFMA’s Asset Management Group (SIFMA AMG) appreciates the opportunity to comment on the consultative document, titled Proposed Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities published by the Financial Stability Board (FSB), dated 22 June 2016. SIFMA AMG members are primarily U.S.-based asset management firms, many with a global footprint. This letter focuses on the four areas of asset management activities identified by the FSB as “structural vulnerabilities” and responds to the FSB’s recommendations within each area: (i) liquidity risk management; (ii) leverage; (iii) operational risks; and (iv) securities lending activities of asset managers and investment funds.
SIFMA AMG is generally supportive of the FSB’s recommendations, including the implementation of robust liquidity risk management programs, access to a wide range of risk mitigation tools, a better understanding of the use of leverage and securities lending practices across jurisdictions, and effective operational risk plans and practices. In our comments, we echo our support but also highlight for the FSB how the deep and intricate regulatory framework that governs the everyday operations of asset managers and investment funds already address many of the concerns presented in the Consultative Document. Our goal is for the FSB to use these responses to further inform their approach to and views of asset management as (1) unique and not akin to the banking industry; and (2) well-equipped to continue its track record for successfully meeting shareholder redemptions through normal and stress conditions without presenting a systemic risk to global financial stability.