Opinion & Analysis

The regulatory squeeze on the so-called "shadow banking” industry is proceeding on so many fronts and in such technical forms, that it is easy to forget it is happening at all. But it assuredly is and one of its manifestations in Europe – the securities financing regulation – will add to the regulatory reporting burden of fund managers.

The one advantage of a private sector reporting template is that it might influence investors. This explains the muted enthusiasm of managers for the standardised risk reporting template devised by consultants Albourne Partners. Regulators seem to like it too, but there are those who say Open Protocol does not always provide an accurate profile of risk.

The increased disclosure by managers to regulators has prompted some allocators to ask if they can see the submissions. Managers worry about the consequences for their relationships with investors, and the associated legal and regulatory risks, but there is an obvious solution.

 

It is now plain that FATCA is merely the vanguard of a concerted global initiative by the leaders of the major economies to create something that resembles a global system of personal taxation, to be policed by the institutions that invest much of the wealth of the world: fund managers.

The reporting of derivatives to trade repositories has failed to produce data of much value to regulators on either side of the Atlantic, thanks to its botched introduction. As early problems diminish, fund managers are pondering how to make derivative reporting routine.

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