Asset management authorisation hub
He also spoke of how, in 2017, the Financial Conduct Authority, the UK regulator, launched the first phase of its new asset management authorisation hub, designed to help new entrants to the market by supporting new firms throughout the authorisation process and afterwards. Further phases were expected to roll out but aspects of this have been put on hold amid the pandemic.
“As we now head out of the [EU] transition period, we urge the FCA to extend this initiative to create a regulatory environment for new asset managers similar to the `Project Innovate’ sandbox environment for fintech and the joint PRA/FCA `New Bank Start-up Unit’,” he said (referring to Prudential Regulation Authority as well as the FCA).
“The idea behind this is to have an easier and faster process of registration, with a lighter touch regime for start-up firms that are targeting sophisticated institutional investors until they grow to a larger size or start to take on retail customers, at which point they would graduate to the `full’ regulatory environment - like an adolescent becoming an adult,” it said.
“We believe that greater allowance for proportionality, rather than new rules, is the key. This would promote yet more competition in the financial services space, increase consumer choice and support innovation and entrepreneurialism. Simultaneously, it would enhance the attractiveness of the UK as a jurisdiction for the establishment of financial services and corollary areas,” Illingworth said.
More work must be done to strengthen fund management sector ties with Asia, NCI said.
“NCI believes that UK policymakers/regulators should capitalise on the UK funds industry’s opportunity to further cement its presence in APAC, where a number of our members see large growth potential. By developing a UK-own fund brand, to compete with UCITS and AIFs, we can strengthen the global distribution footprint of UK funds in the region and benefit both the UK and Asian economies,” Illingworth said.
The UK should sign up to at least one or both of the Asia Region Funds Passport (ARFP) or ASEAN Collective Investment Scheme (CIS) to boost its APAC distribution footprint, he continued.
Last year, the think tank created NCI Singapore, to spread its message and work in Asia. Some time ago, this publication wrote about the development of pan-Asian fund markets and how a number of jurisdictions have sought to emulate the perceived success of the UCITS fund model.