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The association was responding to the consultation paper from the Financial Stability Board (FSB) on proposed policy recommendations to address structural vulnerabilities for asset management activities.
In its paper, the FSB made a number of recommendations to address what it sees as four main ways in which asset managers are structurally vulnerable, with two of the four – liquidity mismatch and leverage – considered the most important.
But a fifth area – which the policy proposals do not address – concerns the potential risks to financial stability that stem from pension funds and sovereign wealth funds.
Previously, BlackRock, Vanguard and industry groups had suggested pension funds should not be exempt from being classed as ‘global systemically important financial institutions’ (SIFIs).
And the FSB has hinted that pension funds could yet be considered systemically important.
But PensionsEurope, in its response to the policy proposals, said: “We agree with the FSB statement that pension funds contribute to the stability of the financial system thanks to their long-term horizon and due to the fact their investment choices are not significantly affected by temporary fluctuations of the markets.”
It said some asset managers seemed to “generalise or overestimate” the risk that pension funds could pose to the financial system, in requesting the FSB/IOSCO to also include pension funds in the NBNI-work.
And it noted that pension funds – as opposed to asset managers – were subject to extensive regulatory (prudential) oversight, based on the European IORP Directive, and on national regulations.