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

Share article

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: Address Emerging Operational Risk and Alleviating Data Blind Spots with AI Powered Risk Management

The digitalisation of financial services is in full flight, as financial institutions strive to offer the same levels of service and improved customer experience that consumer markets have enjoyed for some time. This digitalisation – providing seamless access to appropriate services on demand – requires great emphasis on client data. This changing digital landscape, and...

BLOG

EU Regulator Offers Guidance on Cloud Outsourcing

ESMA has issued new guidance this month to help financial providers understand their compliance responsibilities when outsourcing functions or investment activities to cloud-based providers. Published on 3 June in in draft form and currently open to consultation, the proposals are designed to help firms mitigate the risks that they are exposed to when outsourcing to...

EVENT

Data Management Summit USA Virtual

Data Management Summit USA Virtual will explore how sell side and buy side financial institutions are navigating the global crisis and adapting their data strategies to manage in today’s new normal environment.

GUIDE

Entity Data Management Handbook – Sixth Edition

High-profile and punitive penalties handed out to large financial institutions for non-compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations have catapulted entity data management up the business agenda. So, too, have industry and government reports on the staggering sums of money laundered on a global basis. Less apparent, but equally important, are...