SIFMA AMG Statement on G-SIFI Designation for Investment Funds and Asset Managers

Release Date: March 5, 2015
Contact: Liz Pierce, 212-313-1173, [email protected]

SIFMA AMG Statement on the FSB and IOSCO Consultation to Examine Investment Funds and Asset Managers for G-SIFI Designation

New York, NY, March 5, 2015 – SIFMA’s Asset Management Group today released the following statement from Timothy Cameron, managing director and head of SIFMA’s Asset Management Group, after the Financial Stability Board (FSB) and International Organization of Securities Commissions (IOSCO) published their second public consultationon Assessment Methodologies for Identifying Non-Bank Non-Insurer G-SIFIs, which outlines a methodology to assess asset managers and investment funds for possible designation as global systemically important financial institutions (G-SIFIs):

“We are concerned that this FSB and IOSCO consultation on creating a methodology to assess asset managers and investment funds for potential G-SIFI designation is a significant step in the wrong direction that could lead to negative consequences for investors and capital markets with no meaningful benefit in managing systemic risk.

“This consultation appears to disregard the meaningful and substantive comments received by the FSB and IOSCO regarding the first methodology consultation, which demonstrated how asset managers and investment funds have fundamentally different risk profiles than banks, making G-SIFI designation at the entity level inappropriate. The consultation’s continued focus on size, interconnectedness, complexity, substitutability and cross-jurisdictional activities does not accurately reflect factors which could lead to contagion risk in the asset management industry and therefore is not likely to be effective in managing systemic risk.

“As outlined in our comment letter, we strongly believe it is more effective for asset managers’ primary regulators to review activities in which investment funds and firms engage in and consider if additional regulation is necessary to help manage risk. We encourage global prudential regulators to pause and allow national systemic risk regulators and primary regulators, such as the Securities and Exchange Commission (SEC), to complete their current initiatives focused on products and activities, and consider the cumulative impact of any new regulations before moving forward with any designations.

“We will further review the details of this consultation with our members and submit a comment letter ahead of the May 29, 2015 deadline.”