When preparing this year’s Field Guide, I found myself thinking —perhaps owing to my New England roots—about how by the middle of the 19th century, the richest city per capital in America was not Boston, New York, or Charleston but rather New Bedford, Massachusetts. In fact, for a time, New Bedford was one of the richest cities in the world. How did such a small and, today, unassuming place amass such dizzying wealth? New Bedford was the center of young America’s first global industry: Whaling.
The New England whaling fleet’s reach was truly global, patrolling the seven seas in search of the leviathans they sought to slay. At the time, one of the most treacherous crossings was the trip from the Atlantic to the Pacific. Long before the construction of the Panama Canal, the journey required ships to navigate around Cape Horn, the southernmost tip of South America and one of the world’s most hazardous passages. Whalers braved heavy gales, rogue waves, and menacing icebergs. But if they were lucky enough to survive the trip, they found themselves in the relatively tranquil Pacific.
In a way, the last few years for the asset management industry have been similar to the whalers’ trip around Cape Horn. Facing the tumult of the financial crisis and then the constant squall of the great reregulation, there have been times that it seemed like the industry would never reach calm waters again.
However, as we look forward to 2016, we may have finally turned the corner. Not only will the year ahead bring the implementation of many final pieces of new regulation, such as UCITS 5 and PRIIPS, there is also a notable shift in policymakers’ attitudes. No longer are tighter rules their sole focus. Instead, policymakers are looking to kick-start growth with frameworks that can create opportunities for asset managers. Nowhere is this more obvious than the EU’s grand Capital Markets Union project.
After a hard passage, the asset management industry may finally be rounding Cape Horn and entering into calmer waters. This is not to say that the industry will not face regulatory squalls in the future. As the 19th century whalers knew, you always need to be on the lookout for the occasional storm or white whale. However, the arduous part of the journey may be well behind us. So, while keeping a watchful eye on the horizon for potential regulatory challenges, the industry may soon be able to focus on opportunity and growth once again.
We hope our 2016 regulatory field guide will help you navigate this final stretch of the journey to calmer waters.
Visit bbh.com/regulatoryfieldguide to explore the digital version of the guide.