ASIC chairman Greg Medcraft has warned fund managers about “structural vulnerabilities” in the sector that could present “financial stability risks”.
Speaking at the Bloomberg Buy-Side Forum in Sydney yesterday, ASIC chairman Greg Medraft spoke about a recent Financial Stability Board (FSB) publication about risks in funds management.
The FSB's Policy recommendations to address structural vulnerabilities from asset management activities aims to "enhance the resilience of asset management activities", Mr Medcraft said.
"The policy recommendations address structural vulnerabilities from asset management activities that could potentially present financial stability risks," he said.
"One major area of focus of these recommendations is operational risk and the challenges faced by asset managers during stressed market conditions."
ASIC has responded locally with the release of Regulatory Guide 259 in March, which provides guidance to responsible entities on risks related to liquidity, markets, operation, governance and strategy, Mr Medcraft said.
"The domestic industry is diverse, ranging from large multinational asset managers with sophisticated and well-resourced risk management arrangements to smaller players with limited resources," he said.
"RG 259 aims to create a benchmark within the industry where there was previously little industry guidance.
"To ensure it is able to accommodate the differing situations of the many varied Australian managers, the guidance provides flexibility, rather than being prescriptive to suit individual business models."
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