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Systemic Risk Council Comments on the Financial Stability Board's Consultative Document on Asset Management Activities
In its letter, the Council expressed its support for the FSB's work on potential risks to financial stability arising from asset management structures and practices. The Council offered broad comments and recommendations under the four categories identified in the Consultative Document: (1) liquidity mismatch; (2) leverage within funds; (3) operational risk and challenges in transferring investment mandates or client accounts; and (4) securities lending activities of asset managers and funds. Specifically, the Council recommended that the FSB consider:
In addition, the Council identified and discussed a possible area for further work by the FSB relating to unlevered funds that do not offer frequent redemption opportunities as well as provided an observation on issues that it believes should be covered in the FSB's planned future work on pension funds.
The full text of the letter is available here.
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The independent, non-partisan Systemic Risk Council (www.systemicriskcouncil.org) was formed to monitor and encourage regulatory reform of U.S. and global capital markets, with a focus on systemic risk. The Council is funded by the CFA Institute, a global association of more than 125,000 investment professionals who put investors' interests first and set the standard for professional excellence in finance. The statements, documents and recommendations of the private sector, volunteer Council do not necessarily represent the views of the CFA Institute. The Council works collaboratively to seek agreement on each of its recommendations.
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