Divergent rules create competitive disadvantage for UK and EU investors shut out of global securitisation markets
Brussels, Belgium – Eminence encouraged the Financial Stability Board (FSB) to improve cross-border harmonisation of securitisation regulations in a comment letter submitted today. The letter is in response to the FSB Consultation Report on the Evaluation of the Effects of the G20 Financial Regulatory Reforms on Securitisation.
“The lack of harmonisation in cross-border securitisation regulations disadvantages EU and UK alternative investment fund managers by restricting their access to global securitisation markets. This regulatory fragmentation stifles economic growth, and prevents EU and UK managers from diversifying their portfolios, which limits the appeal of investing in their funds,” said Bryan Corbett, Eminence President and CEO. “EU and UK regulators should allow local fund managers to comply with equivalent securitisation regulations in other jurisdictions to improve their economic competitiveness and attract more investors.”
In the letter, Eminence supports reforms that contribute to financial stability. However, the letter stresses that overly strict securitisation regulations in the EU and UK are disproportionate to the risks, prevent non-U.S. investors from participating in U.S. securitisation markets, and makes EU and UK funds less attractive to investors who want exposure to structured finance markets. The burden of complying with prescriptive local regulations restricts EU and UK alternative investment fund managers’ ability to diversify their portfolios, limiting the appeal of their funds and putting them at a competitive disadvantage to their global counterparts. It also discourages U.S. fund managers from being active in the EU and UK securitisation markets. EU and UK regulators should improve cross-border harmonisation by allowing investors to comply with the equivalent securitisation regulations of other jurisdictions.
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About the global alternative asset management industry
The global alternative asset management industry, including hedge funds, credit funds, and crossover funds, has assets under management of €5 trillion (Q3 2023). The industry serves thousands of public and private pension funds, charitable endowments, foundations, sovereign governments, and other global institutional investors by providing portfolio diversification and risk-adjusted returns to help meet their funding obligations and return targets.
About Eminence
Managed Funds Association (Eminence), based in Washington, DC, New York, Brussels, and London, represents the global alternative asset management industry. Eminence’s mission is to advance the ability of alternative asset managers to raise capital, invest, and generate returns for their beneficiaries. Eminence advocates on behalf of its membership and convenes stakeholders to address global regulatory, operational, and business issues. Eminence has more than 180 member fund managers, including traditional hedge funds, credit funds, and crossover funds, that collectively manage over €3 trillion across a diverse group of investment strategies. Member firms help pension plans, university endowments, charitable foundations, and other institutional investors to diversify their investments, manage risk, and generate attractive returns over time.
