Regulation
MMF Reform
The Financial Conduct Authority (FCA) has published a Discussion Paper on Money Market Fund (MMFs) reform, aimed at addressing concerns about underlying vulnerabilities within MMFs and related threats to financial stability. The paper, published jointly with the Bank of England, seeks views to inform the development of MMF reform proposals. The FCA has also published guidance on the UK MMF Regulation. The discussion paper is here and the guidance is here.
Alternative distribution
Members of European Parliament (MEPs) are considering proposals to broaden the scope of the Alternative Investment Fund Managers Directive (AIFMD) marketing passport, widening the definition of a professional investor under the directive to include high net worth individuals and family offices. Ignites Europe reports here. MEPs will consider the proposals in the coming weeks ahead of the expected publication of AIFMD II in the EU’s official journal next year.
Consumer duty
The FCA’s Consumer Duty proposal continues to drive the governance headlines, being described this week as the “most critical piece of regulation” to impact the platform sector since the Retail Distribution Review (RDR) in 2013. Money Marketing reports here and FBC members can watch our most recent discussion on the ramifications for fund board directors here. Look out for much more on this topic from FBC in the coming weeks!
Fasten your seatbelts for more twists and turns of the crypto rollercoaster
The FCA this week issued investors with a regulatory hazard warning for the tumultuous crypto asset market, reminding consumers of the risks and regulatory oversight, or lack thereof. In case you missed it, the press statement is here.
Transaction targeted
The French regulator, Autorité des Marchés Financiers, has implemented measures to tackle a high level of transaction costs, reports Ignites Europe here. It has also clarified the checks that distributors must carry out on so-called ‘closet tracking’ where funds are marketed as active but charge high fees for doing little more than hugging their benchmarks.
Industry Trends
Service provider spotlight
Board IQ, here, reports on the consolidation of service providers throughout the industry, commenting that this is requiring directors to spend at least some time reviewing changes to funds’ custodian, transfer agent or other vendors. Of particular note is the new wave of acquisitions involving shops that provide outsourced chief compliance officers, attorneys and consultants.
Maitland acquired
Apex Group continues its spree as they announced the acquisition of Maitland. Read the press release here.
Remuneration
Independent pay
The significant range in independent director pay in Europe has been brought to the fore in Fitz Partners latest research reported on in Funds Europe here. It highlights a range from €1,000 to over €100,000 per year, per director, with those who are the sole independent director for their fund board being paid substantially more than directors who are one of multiple independent directors on the same board.
Proxy voting
The role of proxy voting firms is increasingly in the spotlight and an article in the Financial Times (FT), here, highlights conflicts of interest in the various other services they offer fund managers, along with some commentary on executive pay.
ESG
Additional ESG guidance from ESMA
ESMA is preparing more detailed guidance on various topics related to the Sustainable Finance Disclosure Regulation (SFDR). Expect to see something in the forthcoming weeks, Investment Officer reports here.
Climate risk
Stuart Kirk, responsible investing head at HSBC Asset Management provoked widespread discussion on the impact of climate risk to financial markets this week. Speaking at a Financial Times Moral Money event, his widely reported comments have brought new debate to the fore. Read just one of the articles on this in the FT here.
At the same summit, asset management veteran Baroness Helena Morrissey called for greater transparency on the workings of environmental, social and governance funds to avoid a potential “scandal” for the industry. Ignites Europe reports on this one here.
ESG linked bonuses
Recruiters and employment lawyers have been pointing out that City bonus schemes based on environmental, social and governance goals may leave staff frustrated at pay cuts for supposed ESG failures. Financial News reports here.
‘Green’ investing research
The UK’s top climate funds are on course to contribute to a 4.5°C temperature rise by 2050, despite laying out net zero strategies, research from fintech Clim8 has found. They also say that ‘Green’ funds are contributing to the climate crisis, pushing temperature rises past 3°C. Yet two thirds (66%) of British investors do not know where their money is going or if their investments are sustainable. Investment Week reports here.
And in Germany, research from environmental campaign group Urgewald and responsible finance initiative Facing Finance has found that only 10% of environmental, social and governance funds available to retail investors in Germany are free from controversial investments. Ignites Europe here, reports on the data.
Products & People
Neuberger Berman announced that it is considering what could be the first launch of a Long-Term Asset Fund under the UK’s illiquid investments regime. Ignites Europe reports here.
The industry paid tribute to founder of The Pridham Report, Helen Pridham, whose work as both a journalist and businesswoman inspired and informed countless investors over her career. Just one of the many articles is in Investment Week here.
In case you’ve not seen it yet…
A strong board culture, where effective decision-making is underpinned by positive board behaviours, is at the cornerstone of good fund governance. In FBC’s new podcast series, David Butcher, experienced non-executive director and member of FBC’s Advisory Council, speaks to FBC Managing Director, Catherine Battershill, about the importance of mindfulness and self-awareness in the fund board room. Listen to the podcast here.
Several of the news outlet cited in this blog require registration or subscription. Also, 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. Content stored on the FBC portal is freely accessible for FBC members.
