Fortnightly News Blog – 15th February 2022

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Regulation

ESMA and costs and charges

As previously noted, the European securities market watchdog is to work with national regulators to assess the application of disclosure roles for costs and charges under MiFID II across the EU. This comes on the back of ESMA’s plan to examine whether asset managers are meeting their target market requirements under the MiFID directive. Ignites Europe has both the stories, here and here.

CBI says “not likely” to crypto assets for funds

Ireland’s financial regulator, the Central Bank of Ireland says in its 2022 securities market outlook that it isn’t likely to give the go ahead for UCITs on alternative investment funds to invest, directly or indirectly, into crypto assets, despite an “increase in queries.” Ignites Europe has the story here.

Long-Term Asset Fund regime

And here in the UK, in response to a call for input on the UK fund industry, asset management commentators expressed their views on the proposed Long-Term Asset Fund (LTAF) regime. Investment Week has the report here, and in particular, industry professionals declared their continued support for the introduction of LTAFs into the UK investment landscape, which would allow market participants access to longer-term, less liquid assets like venture capital, private equity, and real estate.

ESG

Morningstar culls funds

The Financial Times reports here that Morningstar has removed more than 1,200 funds with a combined US$1.4 trillion (just over £1 trillion) from its European sustainable investment list after an “extensive review” of their legal documents. Laudable, but critics wonder of Morningstar only reviewed the language in the documents, or also examined the funds’ holdings. Without the latter, its only words as one wag pointed out.

PRI: Diversity and inclusion no less important than climate change

A new report from the Principles for Responsible Investment (PRI) which can read and downloaded from their website here, suggest that diversity, equity and inclusion (DEI) issues are human rights issues, and should be viewed by investors with “as much importance as they view climate change issue.”

BNY Mellon calls for inclusive investment

An independent report, commissioned by FBC corporate member BNY Mellon Investment Management, has found that if women were to invest at the same rate as men there would be an additional US$3.2 trillion (£2.4 trillion) of capital to invest globally, and identifies three key barriers to women investing. Details on this important research from BNY Mellon here.

CFA launches climate investing qualification

On the back of its ESG certification, the CFA Society of the UK (CFA UK) has launched a new qualification that aims to give investment professionals a better understanding of the risks and opportunities presented by climate change for investment. Investment Week has the report here, and more details can be had at the CFA UK’s website here

FBC corporate members can get on the front foot in ESG matters at our next AFMs and Responsible Investment event, on 7 March.

FBC director Brandon Horwitz will be joined by the FCA’s Mark Manning, Technical Specialist, Sustainable Finance and Stewardship, and Claudia Chapman, Head of Stewardship at the Financial Reporting Council in an open discussion on what fund managers can and should be doing about Responsible Investing. Register your interest for the 60-minute meeting here.

Cyber Risk

Cyber security oversight for US fund boards 

In an effort to tackle the increase in cyber risk, the Securities and Exchange Commission (SEC) has proposed new rules 206(4)-9 under the Investment Advisors Act and 38a-2 under the Investment Company Act. Board members would be required to approve a fund’s cybersecurity policies and procedures and review, at least annually, a written report about them and cybersecurity incidents. Will we see UK and Europe regulators follow suit? Read the article in Board IQhere

Vox Pop: We’re interested in your thoughts

Do you think UK/European fund boards should have cyber security oversight, as the SEC have proposed in the US?

Answer our quickfire poll question here.

Longer Reading

Everyone is a sustainability expert and the truth about dirty assets

Make the time for these two excellent articles. The first is a Financial News profile of Amanda Young, Abrdn’s new chief sustainability officer who, over her 20-year career, has seen ESG investing go from obscurity to centre stage. Read her views on how now everyone is a sustainability expert here. The second, from The Economist here, explores why the faith that investors place in ESG funds may not be always so well-placed.

Have you heard the latest…..FBC podcast

Did you know that high self-awareness can result in being twice as effective in decision-making and managing conflicts? Learn more in the first podcast in our board behaviours series. Investment governance expert, David Butcher, speaks with Patrick Dunne, seasoned board chair and director and author of the award-winning book “Boards”, about the important role self-awareness plays in individual directors’ contribution to the overall performance of their boards. Catch it on our website, here or on Apple or Spotify

Several of the news outlets cited in this blog require registration or subscription. 

FBC takes no responsibility for the accuracy or quality of the news in the links provided above, and nor are the views and comments representative of FBC or its members, unless expressly stated. In some instances, as indicated, a subscription is required to access certain news articles, and content stored on the FBC portal is freely accessible for FBC members.

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