FCA Outlines Vision for Asset Management in a Changing World

In a recent speech at the Investment Association Annual Conference 2024, FCA Chief Executive Nikhil Rathi emphasised the UK's leading position in asset management and the importance of maintaining this status through a robust regulatory regime, innovation, and global collaboration.

Key Takeaways for Asset Managers

Rathi highlighted several critical regulatory developments and industry trends that will shape the future of asset management:

1. International Regulatory Landscape: The FCA actively participates in international discussions on liquidity risk management, leverage in non-bank financial institutions, margin preparedness, and valuations. Firms must stay abreast of these developments and prepare for potential changes in global standards.

2. Embracing Innovation: The FCA supports innovation in the industry, particularly in fund tokenisation and distributed ledger technology (DLT). Firms should explore these technologies to enhance the efficiency and accessibility of their products and services.

3. AI and Technology: The FCA is focused on ensuring market integrity as AI and other technologies rapidly advance. Firms must be mindful of potential regulatory scrutiny around AI usage, data concentration, and bias and ensure their governance structures are prepared for these challenges.

4. Evolving Investment Landscape: The growth of passive investing, geopolitical risks, and demographic shifts impact the investment landscape. Firms must adapt their strategies and product offerings to meet these changing demands.

5. Regulatory Efficiency: The FCA is committed to making the regulatory regime more efficient and proportionate. Firms should stay informed about upcoming changes to regulations and assess potential impacts on their operations.

6. Operational Effectiveness: The FCA is improving its operational effectiveness with faster authorisation times and a reduced FSCS levy. Firms should benefit from these improvements and engage with the FCA to address concerns.

The Path Forward

The FCA's vision for the asset management industry emphasises the importance of innovation, global collaboration, and a robust regulatory framework. By proactively adapting to these developments, firms can navigate the evolving landscape and thrive in the international market.

Call to Action:

Asset managers should:

• Stay informed: Closely monitor international regulatory developments and FCA initiatives.

• Embrace innovation: Explore new technologies like tokenisation and DLT while ensuring responsible use of AI.

• Adapt to change: Adjust strategies and product offerings to meet investors' evolving needs and the changing geopolitical landscape.

• Engage with the FCA: Maintain open communication with the regulator and participate in consultations.

• Prioritise compliance: Ensure robust compliance programs are in place to meet regulatory requirements.