...we consider that a clear distinction should be made between non-regulated funds and asset managers vs. regulated funds and asset managers...
ICMA's Asset Management and Investors Council (AMIC) welcomes the opportunity to respond via letter to points made in the Financial Stability Board’s Consultation Addressing Structural Vulnerabilities from Liquidity Mismatch in Open-Ended Funds – Revision to the FSB’s 2017 Policy Recommendations.
General
Before answering the details in the series of Questions raised by the FSB, we would like to stress that in recent reports issued on NBFIs during the last few years by the FSB, the “Archegos” case was often provided as an example of an “NBFI” which has failed. While we agree, we consider that a clear distinction should be made between non-regulated funds and asset managers vs. regulated funds and asset managers: while of course provisions and supervision applicable to any regulated sector can always be improved (being banks or non-banks), in terms of systemic risk the primary danger comes from the lack of information and monitoring by supervisors/regulators over financial activities. Any non-regulated entity consequently presents more systemic risks than regulated ones, as by construction, the absence of regulation of a given area leads to a potentially wider scope of unforeseen behaviours, less knowledge by regulators/supervisors, and ultimately less monitoring, enforcement (and sanctions)....
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