Ever since the term “shadow banking” has emerged from the FSB’s working circles in the immediate aftermath of the 2008 global financial crisis[1], our association has consistently argued that its use as a reference to regulated asset management companies and their funds is inaccurate and mis-leading.
Andreas Stepnitzka, EFAMA Deputy Director, Regulatory Policy, comments:
EFAMA has today published its latest monthly Investment Fund Industry Fact Sheet, which provides net sales data on UCITS, and AIFs sold in August 2021, at European level and by country of fund domiciliation.
The Commission aims to present a legislative proposal to address the tax-induced debt-equity bias, also to support the action plan for the Capital Markets Union and to encourage companies to finance their investment through equity contributions rather than through debt financing.
“Oliver Wyman’s study ‘Caught on Tape’ provides a perplexing take on Consolidated Tape for Europe. Sure enough, it starts with accurate observations: the high number of trading venues in Europe, the resultant fragmented liquidity, unseen liquidity due to the lack of a consolidated tape, and the fact that leading markets like the US and Canada today benefit from a real time consolidated tape.
The current lack of quality pre- and post-trade data and the fragmentation of data sources remain an obstacle to the completion of the Capital Markets Union. The benefits of a real-time Consolidated Tape are wide-ranging: from market surveillance for supervisors, to best execution and an improved view on trading opportunities for retail investors, to portfolio management and pre- and post-trade analysis for fund managers to name a few.
EFAMA has been at the forefront of efforts to urge authorities to raise financial literacy levels in the general population through widespread and improved financial and investor education initiatives. We are also a long-time supporter of IOSCO's World Investor Week and organise a yearly event on investor education.
The old-age dependency ratio in the EU continues to increase; Eurostat’s recent figures project that by 2050, there will be fewer than 2 working-age adults for each person aged 65 or older, versus just under 3 today.
EFAMA supports the European Commission’s Omnibus Simplification Package as a crucial step towards reducing bureaucracy and enhancing EU competitiveness. While simplification is necessary, given the current geopolitical developments, it must not compromise the availability and quality of essential sustainable information for investors and asset managers. We, therefore, consider legal clarity and alignment across EU regulations essential to support the transition to a sustainable economy.
EFAMA welcomes the FSB recommendation that jurisdictions develop domestic frameworks to monitor and mitigate the build-up of leverage. These analytical frameworks should take a holistic approach and be empirically driven. The main systemic risk stemming from leverage is the imbalance between liquidity demand and supply during periods of stress, not the (collective) default of non-bank financial intermediaries.
In its response to IOSCO’s consultation on the revised recommendations for liquidity risk management for collective investment schemes, EFAMA welcomes the fact that IOSCO recognises aspects essential for proper risk management (e.g., asset managers’ primary responsibility and the absence of one-size-fits-all approaches).
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