New City Initiative (NCI) and Open Europe reported that European financial regulations including the Alternative Investment Fund Managers Directive (AIFMD) and the revised Markets in Financial Instruments Directive (MiFID) are hampering growth in the asset management sector. Therefore they urge the European Commission to work on creating a single market for asset management and to reconsider these protectionist measures.
Even though the regulation is said to only be felt by those who benefited from EU-wide passports to sell products overseas, Dominic Johnson, chairman of the NCI and chief executive at Somerset Capital Management, said that when managers want to be active across borders they face difficulties. Comparing European with US regulation, he notes that once initial compliance with the US Securities and Exchange Commission’ rules is overcome, as well as dealing with related costs, managers have access to the entire market. Mr. Johnson also flags other issues he considers to be harmful to the asset management sector such as the financial transaction tax and the fact that no distinction is made between retail and institutional investors when regulation is concerned.
The Commission should ease the regulatory burden for small asset managers since, even though the industry is susceptible to crises, these are “different and possibly more easily [managed]”, mister Johnson said.
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