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.

See Also: FSB publishes Proposed Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities (June 22, 2016)