As we enter a new decade, it is an opportune time for reflection on what has passed, but also a chance to look ahead to future challenges and opportunities within asset management. If the last ten years were largely defined by large scale regulatory implementation, the next ten are likely to involve more focused revisions to existing rulesets as regulation looks to keep pace with societal and technological evolution.
Which brings us to the theme of this year’s Regulatory Field Guide: clarity and precision. Regulators, to a much greater degree than in the past, are presenting a clearer view of what is expected from firms and investors. Greater levels of prescription and certainty within rulesets are helping industry constituents come to terms with the tangible benefits and effects of regulations. Greater transparency is also enabling these stakeholders to objectively view whether or not the regulation is working as intended.
While the focus for many regulatory developments this year will be on clarifying the finer details of a regulation, this does not mean there is a lack of “mega regulations” on the horizon. Brexit remains unfinished, the global focus on framing appropriate environmental, social, and governance (ESG) regulations will continue, as will the increasingly louder calls to more formally regulate the use of new technology. In such an environment it may be the most flexible and agile rather than the biggest and strongest who thrive.
With all that said, three areas stand out surrounding the global regulations of 2020: reporting, transparency, and modernization. With increasingly stringent reporting requirements, managers must ensure they have a proper data strategy in place to handle both the volumes and accuracy of data required. As the search for transparency continues, among regulators, investors, and asset managers, we’re likely to get a closer look inside things like management fees, performance fees, and fund liquidity stress testing results. And as technological evolution accelerates across asset management, regulators must consider how to best oversee nascent technologies and asset classes to protect investors and monitor systemic risks without stifling innovation or better investor outcomes. It is a delicate balance that will set the tone for the industry throughout this decade.
Our 2020 Regulatory Field Guide contains insights from the regulatory experts at Brown Brothers Harriman and the asset management industry. We hope you find this guide helpful and informative as you grasp the intricacies of regulatory change throughout a year of increased clarity and precision.
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