Regulation drives asset management consolidation

Author: Jimmie Franklin | Published: 21 Aug 2019

A tough regulatory environment has left asset management struggling to comply, and keep costs down.

This is leading to consolidation in the industry, with regulations in the EU such as  Alternative Investment Fund Managers Directive (AIFMD), Markets in Financial Instruments Directive (MiFID II), European Market Infrastructure Regulation (EMIR) and General Data Protection Regulation (GDPR) having been particularly intense for asset managers, affecting their margins.

"For many firms struggling under the weight of these complex regulations, consolidation is often seen as the best option," said Jamie Carter, chairperson of the New City Initiative (NCI). The New City NCI is a think tank that offers expertise on financial regulation.

Consolidation has seen boutique asset managers – smaller, more specialised providers – buckle under the pressure of competing with larger, mega funds that benefit from economies of scale. This has led to a strangled environment, with competitiveness at risk.

KEY TAKEAWAYS

Scale has become...