Opportunities abound for the global asset management industry as the shrinking of the banking sector has thrust asset management to the heart of global capital flows and the pace of regulatory change is starting to ease off, according to a new KPMG report.
KPMG’s Evolving Investment Management Regulation report highlights that the regulatory uncertainty of the past years has settled down and predicts that 2014 is the year the wheel turns, with the sector now entering the implementation phase of regulation with much greater clarity.
Tom Brown, global head of investment management at KPMG, said: “It is indeed the ‘age of asset management’. The industry has come through the financial crisis well and is now operating in a much more stable regulatory environment with greater clarity and certainty. The next five to ten years hold enormous potential for asset managers and I expect to see players introduce innovative products and adopt new strategies as the industry plays its role in the broader savings debate.
“Regulators have followed through on their promise to restrict trading and private funds within banks, which has led to trillions of assets being spun off. As talented traders have less access to bank balance sheets, we will increasingly see them migrate toward the asset management continuum, which is another positive for the industry.
“While there is enormous opportunity, the industry is also likely to come under more intense scrutiny as firms are increasingly considered systemically important institutions. With so many activities previously housed in banks moving over to asset management it is inconceivable that the industry will not be closely monitored.”
The report examines the key regulatory challenges to face investment managers in the future, discussing shadow banking and the call for additional data and reporting requirements to improve transparency.