European Parliament rapporteurs Sirpa Pietikäinen (AIFMD) and Sven Giegold (UCITS) recently hosted a conference on the future of European asset management in the European Parliament. The event aimed to evaluate the current state of regulation and to identify key strands for future developments of the asset management sector.
Since the financial crisis, asset management has been in the focus of renewed regulatory efforts. In Europe, the sector plays an important role in the provision of investment products and has the potential to foster long-term and sustainable investment.
Significant progress has been made at the EU level with the development of a new regulatory framework around the key pillars AIFMD and UCITS V. Improvements have been felt with regards to transparency, consumer protection and competition. After intensive implementation work, the time has come for a first assessment of these regulatory efforts.
An opening panel therefore served as a stocktaking of these post-crisis regulatory measures. It also aimed to provide an outlook on work still to be done on implementation and further market integration, including the Capital Markets Union (CMU).
A second panel discussed how asset management can contribute to the needs of investors who, with interest rates historically low, are looking for alternatives to traditional savings products. This panel addressed how consumer protection can be offered for ‘alternative investments’ and, in light of the Paris Climate Conference, how financial resources can be channelled to green investment projects.
Please find the video recording of the conference here: http://web.greensefa.streamovations.be/index.php/event/stream/the-future-of-european-asset-management
Panel 1: European asset management after the crisis: regulatory stocktaking and outlook
As a reaction to the financial crisis, a new regulatory framework with the key pillars AIFMD and UCITS V was established in the EU. These significant steps have paved the way to improvements regarding transparency, consumer protection and competition. After intensive work to ensure proper implementation, it is a good moment for a stocktaking of the regulatory efforts. In order to be effective, this next step should take into account issues which hamper the effectiveness of regulation, such as proportionality, best practices of cost disclosure, a level-playing field especially between investment fund and insurance products or the impact of new technologies on distribution and advice.
Despite these above mentioned regulatory efforts, the European asset management sector still suffers from fragmentation, which often limits the size of funds and can contribute to higher costs for investors. In its Communication on the Action Plan on Building a Capital Markets Union the European Commission pointed out that it is crucial to promote market integration, amongst others to achieve price reductions for retail investors and increase their choice of services. FinTechs are growing rapidly and are set to shake up the market. Nevertheless, different consumer preferences, cultural habits and institutional structures are still deeply entrenched in the European financial markets and will place constraints on market integration efforts, which will continue to exist at least in the near future.
That said, this session aimed at addressing and discussing a stocktaking of existing regulation, potential and limits of further market integration as well as recent market developments (such as market concentration due to the dominant role of certain investment fund providers).
Panellists
Ugo Bassi, Director of Financial Markets, Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), European Commission
Peter De Proft, Director General, European Fund and Asset Management Association (EFAMA)
Mats Öberg, Head of Fund Unit, Swedish Pension Authority
Karel Lannoo, Chief Executive Officer, Centre for European Policy Studies (CEPS). Please find the power point presentation provided by Mr Lannoo on the key policy changes here: https://sven-giegold.de/wp-content/uploads/2016/11/Future-of-European-Asset-Management-presentation-Karel-Lannoo.pdf
Jean-Francois-Biernaux, Test Achats
Moderator: Sven Giegold
Panel 2: The role of investment funds in boosting long-term and sustainable investment
The agreement of the Paris Climate Conference sets the ambitious and necessary framework to mitigate climate change and simultaneously provides opportunities for financial industry and investors to enhance existing and explore new ways of financial investments, which in turn has the potential to effectively contribute to achieving a low-carbon economy and also foster the development of the real economy. At the same time, investors’ interest in sustainable investment products has been increasing. This increased interest is meeting a currently prevailing low-interest environment. In these circumstances, asset management can play an important role in reconciling the needs of investors looking for alternatives to traditional savings products and the need to channel financial resources to green investment projects. Likewise, the European Fund for Strategic Investment (EFSI) has contributed to the development of the market of green finance, especially through its support for energy efficiency projects.
This session aimed at shedding light on the current state of the European green finance market, potential and limits for its further development as well as the need to ensure appropriate consumer protection.
Panellists
Evert van Welsum, Head of Department Investors and Issuers, European Securities and Markets Authority (ESMA)
Hugues Chenet, Co-founder and Scientific Director of the 2° Investing Initiative
Joanna Cound, Head of Government Affairs and Public Policy, Europe, BlackRock
Guillaume Prache, Managing Director, Better Finance
Moderator: Sirpa Pietikäinen