The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

State Street Vision Report Examines the Impact of Regulatory Change Within Europe’s Investment Management Industry

State Street Corporation today released the latest of its Vision Focus reports which identifies trends within the European investment management sector. Entitled, “The Changing Shape of European Investment Management,” the report examines the wave of new regulation worldwide and its impact on business practices and operating models.

According to the report, regulatory efforts have shifted from enhancing market efficiency to matters of investor protection, reflecting market-wide calls for improved transparency and investor security. The asset management industry is in an evolutionary phase as a result of increasing regulation. With the implementation of initiatives such as the MiFID II Review, UCITS V, the European Commission’s review of package retail investment products (PRIPs) and the review of the Investor Compensation Scheme Directive (ICSD), the regulatory goals are clear but the long-term impact in terms of competitiveness, operational efficiency and investment performance are still uncertain.

Marty Dobbins, managing director of State Street in Luxembourg commented, “The challenge for asset managers of all sizes will be to stay focused on their core business of building successful investment portfolios. It will be easy to be distracted from this given the volume of emerging regulation. We are working closely with clients to guide and assist through the significant regulatory and investor-driven change that confronts them.

“Asset managers are looking for servicing solutions that are consistent across Europe and that can successfully navigate the regulatory complexity at both a regional and local market level. Unfortunately amid this wealth of emerging regulation, there will be winners and losers, and their identity will determine the future shape of the European investment management industry,” Dobbins concluded.

The paper also explores how regulation is likely to have a major impact on future product development. Mike Karpik, senior managing director and head of Investments for State Street Global Advisors in Europe, the Middle East and Africa, commented, “Product development teams will need to collaborate closely with their risk and compliance counterparts to ensure that new products are compliant, workable and fit for market. The marketing of alternative-style strategies under the UCITS brand, a trend which could be accelerated by the AIFMD, is serving to bring hedge fund-like vehicles to a greater audience, although this will not be without greater regulatory scrutiny and a requirement for more investor education. Asset managers will need to be highly cognisant of the type of investor they target.”

State Street’s Vision Series addresses key trends and developments impacting the financial services industry. Previous reports have focused on technology innovation, pensions, UCITS IV, exchange-traded funds and sovereign wealth funds. To download a copy of this Vision Focus report or others in State Street’s Vision series of in-depth reports, please visit www.statestreet.com/vision.

Related content

WEBINAR

Recorded Webinar: Maximising success when migrating big data and analytics to cloud

Migrating big data and analytics workflows to the cloud promises significant cost savings through efficient use of infrastructure resources and software that scales dynamically based on data volume, query load, or both. These are valuable gains for investment banks, but they can only be fully realised by taking a new approach to architecture and software...

BLOG

Derivatives Service Bureau Sets Timeline for Consultation on OTC ISIN and CFI Services in 2022

The Derivatives Service Bureau (DSB) has published the timeline for its 2021 industry consultation on 2022 OTC ISIN and CFI service provision. Core themes focus on providing updates for service enhancements sought last year, as well as risk analysis relating to the DSB’s cybersecurity and cloud resilience. The OTC ISIN and CFI consultation will operate...

EVENT

RegTech Summit APAC Virtual

RegTech Summit APAC will explore the current regulatory environment in Asia Pacific, the impact of COVID on the RegTech industry and the extent to which the pandemic has acted a catalyst for RegTech adoption in financial markets.

GUIDE

ESG Handbook 2021

A-Team Group’s ESG Handbook 2021 is a ‘must read’ for all capital markets participants, data vendors and solutions providers involved in Environmental, Social and Governance (ESG) investing and product development. It includes extensive coverage of all elements of ESG, from an initial definition and why ESG is important, to existing and emerging regulations, data challenges...