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Compliance Corner: New KPMG Report
Editorial Staff
3 December 2023
KPMG The report draws information from over 11,000 publications by regulators across over 30 jurisdictions, and consolidates the insights and knowledge of KPMG specialists around the world on common regulatory themes, challenges, and market opportunities in asset management regulation. Andrew Weir, global head of asset management at KPMG, said: “Given the cross-border nature of the asset management industry, effective management of regulatory divergence is only going to become more important over time.” “To respond effectively to these challenges, asset managers need robust and flexible business models, with strong governance, intelligent risk management frameworks, state-of-the art technology, good oversight of service providers and appropriate distribution strategies. Firms need to manage their own costs and ensure that the costs and charges borne by investors are transparent and justifiable,” he added. There has also been a notable increase in regulatory efforts around the world to protect retail investors, the report adds. Besides traditional themes such as product governance, there is a significant focus on value for money and transparency, reflected in new fair value considerations and disclosure requirements. In some jurisdictions, funds are required to have licensed depositary entities, which act independently from the fund management company, to better safeguard investors. Regulators around the world also continue to create new fund vehicles or amend existing products, to offer flexibility and compete for market share. Jurisdictions are opening their markets to foreign investors. Authorities are aiming to bolster investment from professional investors, and in infrastructure to assist economic recovery, the report adds. In addition, integrating ESG risks into the risk management process is of vital importance for all financial undertakings, the report says. Distributed ledger technology - aka blockchain - also underpins cryptoassets but is being put to good use in market infrastructure initiatives, including fund unit tokenization and settlement.
New regulations can help enhance the local landscape but a diverging approach globally also creates challenges for asset management firms, a new had previously indicated that it would propose an “Ecolabel” regime for green products (including requiring at least 50 percent of the underlying investments to be taxonomy-aligned), but progress has stalled, the report continues.