Wright continued, "In taking this important work forward on liquidity risk mismatch issues, leverage in funds, securities lending and operational risks etc it is essential to establish the facts based on good data and analysis. In addition an holistic approach is needed i.e. looking at all parts and behavior of the market including in stressed market conditions — open-ended investment funds but also pension and insurance funds; hedge funds and sovereign wealth funds; and indeed the behavior of ordinary investors. In the policy evaluation process next year existing investment fund laws in different jurisdictions also need to be fully appraised."
Initial work begun in the U.S. in 2013 had focused more closely on the potential designation of individual managers as systemically important, raising the prospect of such firms being subject to increased scrutiny and regulation. A surge of criticism against this approach had led to an open forum in May 2014 where industry participants were invited to respond. Bennett Golub, chief risk officer and founding partner at BlackRock, the world's largest asset manager with $4.5 trillion of assets under management, is reported to have been instrumental in encouraging regulators to consider an activities-based approach during the ongoing consultation process.
Speaking exclusively to CNBC on Saturday, Golub said, "We think that an activities-based approach is the only rational way to address systemic concerns that might be present in products or markets, and policymakers have come to the same view. Asset owners, not asset managers, are the ultimate determining actors. Regulation of the actual activity raising concerns is therefore necessary, regardless of who undertakes it."
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