Many external challenges face the asset management industry, including demands for sustainable finance, volatility in capital markets, technological innovation, and cyber threats. Asset management firms must adopt resilient and dynamic business models to be successful in navigating further rafts of new rules, increasing regulatory divergence and greater supervisory scrutiny.

A lack of global standards and national nuances mean that regulators around the world are implementing detailed rules and guidance in different ways. Increasing regulatory divergence is causing complexity and challenges for cross-border asset managers in terms of how they manage and market their products.

The 13th edition of KPMG’s annual flagship Evolving Asset Management Regulation Report brings together a wide range of regulatory priorities, developments and proposals impacting the global asset management industry. Knowledge and insights of KPMG specialists around the world, has enabled us to identify three common regulatory themes for the UK, that impact all types and aspects of asset management businesses, and represent market opportunities.

Download the 2023 Evolving Asset Management Regulation report

Key actions for CEOs:

  • Deliver sustainable finance: Review the firm's overall strategy, embed sustainability factors into the investment process, ensure names and disclosures correctly reflect product offerings, and prepare to meet expanding disclosure requirements.

  • Mitigate systemic risk: Review investment risk management arrangements, particularly relating to the liquidity management of open-ended funds, and stress testing. Control the use of leverage and adopt asset valuation best practices, especially for private, real and crypto-assets.

  • Double-down on resilience: Review the risk management framework and controls in the light of challenges and opportunities. Identify and manage operational and information security-related risks, including third-party oversight arrangements. Maintain adequate financial resources.

  • Embrace innovation: Explore potential uses of tokenization and artificial intelligence to drive efficiencies and new business, within the guardrails of the evolving regulatory framework.

  • Protect investors: Align the firm's strategy, culture, and purpose with clients' best interests.

  • Project good governance: Evaluate the success of the firm's culture, leadership, and governance model, and make changes where needed. Encourage a “speak-up” culture, ensure the composition of boards provides sufficient knowledge, expertise, experience and challenge, adopt a flexible business model, and deter financial crime.

  • Seize opportunities: Factor opening markets and new and evolving fund vehicles into the business and product strategy.

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