Pan-European Asset Management
The asset management industry encompasses a broad range of businesses, in terms both of size as well as regulatory regimes. In terms of volume, the importance of the industry differs remarkably across jurisdictions, and is influenced by the wealth and savings behaviour of citizens, the existence and maturity of funded occupational pension schemes and the domestic regulatory environment. No less than five different legislative regimes govern asset management in the EU: banking, investment services, insurance, pension funds and investment funds.
The purpose of this Task Force was to assess the adequacy of the current regulatory framework and the consistency of rules across sectors, most importantly from a capital adequacy and asset allocation perspective, to determine whether further regulatory action was necessary to advance market integration.
The findings of the Task Force are as follows:
- There is no need for a horizontal asset management directive to supersede the current directives.
- The recent agreement on two new investment fund directives – UCITS (undertakings for collective investment in transferable securities) II & III – and the pension funds directive (provisional) are important steps towards a more integrated European market for asset management, with a truly single passport.
- The choice of asset management regime has been extended to include discretionary asset management as an option for UCITS management companies (in the UCITS III) and for the application of the prudent man rule of the pension funds directive to the pension fund business of life insurance companies.
- The key issue, in the spirit of the Lamfalussy report, is to focus on level 2 and 3 issues to ensure adequate cooperation between European supervisory authorities so as to guarantee consistent implementation and a harmonised approach in secondary legislation and in supervisory practices. Both the UCITS and pension funds directives require a Lamfalussy-style approach for implementation of legislation at levels 2 and 3, which is not yet in place.
- The UCITS Committee has only limited implementing powers and is not formally part of the Securities Committee/Committee of European Securities Regulators structure, which should ensure harmonised implementation.
- The Insurance Committee will need to be upgraded to cover the secondary legislation of the pension funds directive, and will need a second level to review harmonised implementation.
- The amended investment services directive may become the most open of the asset management directives, with harmonised conduct-of-business rules.
- The new UCITS directive is probably the easiest one, with a low capital requirement, and the option of discretionary asset management.
- Much also depends, however, on the extent of the application of the operational risk charge in the context of the New Basel Capital Accord, which may apply to both regimes. Compared to other lines of business, losses resulting from operational risk in the asset management industry have been limited so far, and these can be covered by private insurance. It should also be remembered that US investment fund companies are not subject to capital requirements and that US broker-dealers will not be subject to the Basel Accord.
Members of the Task Force
Chair: Patrick Zurstrassen, Managing Director & President of the Management Committee, Crédit Agricole Indosuez Luxembourg
Rapporteurs: Karel Lannoo, CEPS CEO
Mattias Levin, former CEPS Fellow
Members and observers
Björn C. Andersson, Executive Vice President, Handelsbanken
Arianna Arzeni, Marketing Manager, Crédit Agricole Indosuez Luxembourg
Rym Ayadi, Research Fellow, CEPS
Alan Barry, Senior Product Developer, ABN Amro Bank N.V.
Tim Blackwell, Executive Director, UBS Global Asset Management
Joanna Cound, Merrill Lynch Investment Managers
Marc Dassesse, Professor, ULB (Free University of Brussels)
Bernard Delbecque, Senior Economic Advisor, European Federation of Investment Funds & Companies (FEFSI)
Terry Donovan, Deputy Head, Central Bank of Ireland
Kerry Duffain, Director, Citigroup
Joanna Elson, Director, British Bankers’ Association
Soren Gade, Head of Department, Danish Bankers Association (Finansradet)
Kyriakos Gialoglou, Research Fellow, CEPS
Charles Goldfinger, Managing Director, Global Electronic Finance
Linda Gray, Central Bank of Ireland
Tim Herrington, Partner & Head, Clifford Chance
Staffan Jerneck, Deputy Director & Director of Corporate Relations, CEPS
Matthew Judd, Clifford Chance
Steffen Kern, Senior Economist, Deutsche Bank AG
Helmuth Martin, Senior Vice President, Commerzbank EU-Liaison Office Brussels
Steffen Matthias, Secretary General, European Federation of Investment Funds & Companies (FEFSI)
José Navarro de Pablo, Economist, UBS
Richard Parlour, Partner, Richards Butler
Reinhard Petschnigg, Representative, National Bank of Austria
Jane C. Platt, Managing Director, Reuters
Dirk M. Popielas, Head Pension Services Group Germany, Goldman, Sachs & Co OHG
Christopher Preston, Associate-Conduct of Business Standards, The Financial Services Authority
James Ranaivoson, Head of Portfolio Management, European Investment Bank
Derek Reed, Administrator, European Parliament
Wendy Reed, Senior Manager, PriceWaterhouseCoopers
Jean-François Schock, Managing Director, State Street Global Advisors
Axel Schultz, White & Case
Sally Scutt, Deputy CEO, British Bankers’ Association
John J. Stewart, Senior Vice President, State Street Corporation
John K. Thompson, Financial Counsellor, OECD
Mireille Tissot, Member of Senior Management, Swiss Bankers’ Association
Stéphane Tourette, Deputy General Counsel, Credit Suisse Asset Management
Dominique Valschaerts, CCLux,
Michael Von Kessel, ADIG – Allgemeine Deutsche Investment Gesellschaft mbH
Philip Warland, Senior Advisor, Regulatory Advisory Services, PriceWaterhouseCoopers
Miles Webber, Head of Public Affairs, Merrill Lynch Europe
Ian Williams, European Affairs Manager, Prudential PLC
Michael John Wilson, Executive Director, State Street Bank Europe Ltd.
Georges Zavvos, Member of the Legal Service, European Commission
Meetings of the Task Force
1st meeting: 29 Nov 2001
2nd meeting: 26 Feb 2002
3rd meeting: 11 Jun 2002
4th meeting: 17 Sept 2002
Final Report of the Task Force, April 2003
'Pan-European Asset Management: Achievements and Regulatory Impediments'
Disclaimer: Affiliations are provided for identification purposes only. Task Force members participated as individuals; the report reflects their own views and not those of organisations with which they are affiliated. The report is approved and supported by all Group members. However, members may not necessarily agree on all the detailed issues.