Brown Brothers Harriman has released its 2020 Regulatory Field Guide, containing insights from the firm’s regulatory experts and the asset management industry.
Regulators, to a much greater degree than in the past, are presenting a clearer view of what is expected from firms and investors. Greater levels of prescription and certainty within rulesets are helping industry constituents come to terms with the tangible benefits and effects of regulations. Greater transparency is also enabling these stakeholders to objectively view whether or not the regulation is working as intended.
While the focus for many regulatory developments this year will be on clarifying the finer details of a regulation, this does not mean there is a lack of “mega regulations” on the horizon. Brexit remains unfinished, the global focus on framing appropriate environmental, social, and governance (ESG) regulations will continue, as will the increasingly louder calls to more formally regulate the use of new technology. In such an environment it may be the most flexible and agile rather than the biggest and strongest who thrive.
With all that said, three areas stand out surrounding the global regulations of 2020: reporting, transparency, and modernization. With increasingly stringent reporting requirements, managers must ensure they have a proper data strategy in place to handle both the volumes and accuracy of data required.
As the search for transparency continues, among regulators, investors, and asset managers, we’re likely to get a closer look inside things like management fees, performance fess, and fund liquidity stress testing results. And as technological evolution accelerates across asset management, regulators must consider how to best oversee nascent technologies and asset classes to protect investors and monitor systemic risks without stifling innovation or better investor outcomes.