What could change the game in Q1 2021:
• The Biden adminstration: Ending a tumultuous era in U.S. politics, President-elect Joe Biden will be inaugurated in January. We should expect increased global engagement from this administration with international bodies and standards. We await details of the new Chairs for various agencies. One suspects, however, that the Congressional Review Act will come into play and a revisiting of recent lawmaking such as Regulation Best Interest, SEC Derivatives Rule, and DOL’s rule on ESG investing could all be revisited in some way shape of form under the Biden Administration. A larger focus on regulatory enforcement at agency level is expected, and possibly the US embrace of the global trend of ESG integration to a greater degree than the previous administration.
• The implications of Brexit remain unresolved for asset management: After years of trials and tribulations, at the very end of this prolonged negotiation, we saw a trade deal agreed between the United Kingdom and European Union. The deal, however, was very light on detail for asset management. The deal committed to further engagement on preparation of a detailed Memorandum of Understanding (MOU) by March end, but with such a tight timeline, there is not great hope that issues such as equivalence will be resolved in short order. It appears that Brexit will remain a huge focus of discussion for the foreseeable future.
• A wider embrace of ESG: With March 10 marked as a red letter decline day for the Level 1 provisions of the EU’s Sustainable Finance Disclosure Regulation (SFDR) and talk that the Biden Administration will see the United States more concretely align with the global trend towards ESG integration, its expected that ESG will remain high on agendas throughout 2021.
• COVID-19 adds to uncertainty: As vaccines become available, there is some optimism afoot about the global economy returning to normalcy. But further outbreaks and elevated infection rates continue to weigh heavily on everyone. While working remotely has been working well for most, asset managers remain concerned about the impact and the ability to sustain sales and marketing efforts without face-to-face interactions. As we enter 2021, uncertainty abounds.
What happened in Q4 2020:
• Brexit: Even with the broad trade agreement at the 11th hour several uncertainties remain for asset managers as the UK and EU continue to determine their future relationship.
• AIFMD: The European Commission (EC) released it’s public consultation.
• Irish ILP: Policy steps toward conclusion. This is a very exciting emerging opportunity for UK and US private market managers.
Top On The Regs Posts of Q4:
• Sitting on the Dock of the Bay: Hong Kong’s Next Great Opportunity| Read more
• NAV Oversight: Global Regulators Urge Funds to Expect the Unexpected| Read more
• ESG: The One Issue We Can All Agree On? | Read more
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