FCA Consults on Asset Management Regulation Update

To better understand the needs of investors in the asset management (AM) industry, the British Financial Conduct Authority (FCA) has published a new regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term paper titled 'Updating and improving the UK regime for asset management'. Interested parties can submit their comments and ideas by 22 May 2023.

FCA Wants to Update Asset Management Laws

The UK firms manage over £11 trillion in assets, making the country a leading hub for asset management. Through the Future Regulatory Framework, the assessment of the future of the local financial services sector outside of the EU, the FCA has an opportunity to enhance asset management regulation with a more modern and customized system that effectively addresses the requirements of UK markets and customers.

The FCA will ensure that any modifications are in harmony with global standards and promote technological advancements and innovation.

"The UK has an opportunity to update and improve the UK regime for asset management. We want to hear from a wide range of voices about how we can enhance the existing standards, and what we should prioritise to bring the most benefits to consumers, firms and the wider global economy," Camille Blackburn, the Director of Wholesale Buy-Side at FCA, commented.

In its latest publication, the FCA presents a broad array of concepts, such as how it can facilitate firms in using technology to enhance customer efficiency and experience. Additionally, it examines how the FCA's regulations can be improved to help companies deliver assistance to retail and wholesale investors, whether based in the UK or internationally.

At the current level of work, the FCA has not yet approved any proposals, and it wants to hear from stakeholders before doing so. The update to the AM rules is in line with the regulator's three-year strategy to promote growth in the quality of local financial markets.

Watch the recent FMLS22 panel on constructing collaboration between fintech, banks and asset management companies.

With or Without the EU, the UK Dominates the Asset Management Industry

According to the Global City's report published on October 2022, the UK still holds the title of the top global center for asset management. As mentioned above, the nation manages £11.6 trillion in assets, making it the second biggest global hub Hub A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method Read this Term after the US.

The asset management industry grew in 2021 by £600 billion (or 5%), while 37% of all European assets are under the UK management. The country's share in the AM industry is more significant than the following three countries combined, including France, Germany and Switzerland.

"Given the UK's leading role as a centre for asset management, we want to make sure our rules are fit for the future. We want a UK wholesale market which supports the economy and is open to innovation, while remaining consistent with high standards of consumer protection and market integrity," Blackburn added.

Additionally, the report by Global City shows that the UK is a convenient location for overseas investors, with 65% of UK investment fund managers' assets based overseas. Overseas clients account for £4.6 trillion of total assets under management.

FCA on a Hiring Spree in 2022

To better serve the asset management and other financial services industries, the UK's regulator added 1,000 new officers in 2022, opened an office in Leeds and accelerated its expansion in Edinburgh.

Meanwhile, at the beginning of 2023, the FCA announced several significant personnel decisions. At the beginning of February, the regulator confirmed the appointment of Aidene Walsh as the Chair of the PSR (Payment Systems Regulator). Welsh has served as the PSR's Interim Chair since April and was recently commissioned for a full three-year term.

Additionally, the regulator has reappointed Baroness Zahida Manzoor to lead the Financial Ombudsman Service (FOS) as its Chair for a second term, which will run until August 2025. The FOS has direct contact with consumers, and in 2022, it accepted more than 73,000 complaints relating to the performance of financial services and products.