Market welcomes end to asset management stress tests

Author: John Crabb | Published: 5 Apr 2017

According to recent accounts, the US’ updated Financial Choice Act will mark the end of stress testing for asset managers. The news has been well received by the market, which is already sceptical of the extent to which mutual funds and the asset management industry can actually be stress tested.

Jeb Hensarling has made himself popular with asset managersSection 165(i) of Dodd-Frank requires 'state nonmember banks and state savings associations with total consolidated assets of more than $10 billion to conduct annual stress tests’, and sets out guidelines on how to do so. But according to Washington rumours, Jeb Hensarling’s planned bill to replace the existing regulation, Choice Act 2.0 will look to repeal this legislation at the first opportunity – despite being put on hold by the House of Representatives until at least June.Market sources have suggested that Section 165(i) was initially designed with the banking system in mind,...