(Adds systemic review)
LONDON, July 3 (Reuters) - The rising influence of "open ended" funds and the impact on developing economies if the investment flows were abruptly reversed remain a concern for global regulators, Financial Stability Board Chairman Mark Carney said on Monday.
The rapid growth in the world's asset management sector since the financial crisis to $75 trillion assets by 2015, or 40 percent of the world's financial assets, has been a largely positive development, Carney told reporters.
An issue of concern, however is around "open ended" funds supplying a substantial proportion of cross border flows into developing economies, Carney said.
Open-ended refers to a type of fund that can issue and redeem shares at any time.
Carney said the concern comes at a time when liquidity, or the ability to sell at short notice to redeem investors, appears better than it is likely to be under stressed conditions.
"The question is what will the consequences be when inevitably there is a period of sharp adjustment, reduced liquidity," Carney said.
"What could the knock-on effects be, first and foremost for the economies, but also for the system as a whole. The best in the asset management industry absolutely gets it, and they try to manage those risks."
Earlier this year, the FSB published a set of measures to address risks from such "structural vulnerabilities" in the asset management sector.
The watchdog had initially sought to develop a framework for deeming big asset managers "systemically important" like big banks and thereby requiring tougher capital and other requirements.
In the face of opposition from markets regulators and the industry, the work was put on ice while focusing on the sector's activities to develop measures that were published in January.
Carney said once these measures have been implemented, the FSB will look at whether any "residual" risks remain in the sector that need addressing, such as by deeming the asset management company to be systemic.
"The expectation is that the answer will be 'no'," Carney said.
(Reporting by Huw Jones, editing by Carolyn Cohn/Keith Weir)