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The fund industry plays an important role in Americans’ saving and money management, managing more than $16 trillion through mutual funds, exchange-traded funds, closed-end funds, and unit investment trusts.
Asset management is an agency business—that is, such firms manage, but do not own, the assets that they invest on behalf of funds or other clients. This means that though asset managers generally decide where and how to invest assets on behalf of their investors, any profits or losses belong to the investors, not the manager. This is just one important distinction that policymakers and the public should understand as regulators discuss systemic risk and consider imposing new regulations on asset managers that could ultimately be paid for by fund investors.
Among those regulators is the Financial Stability Oversight Council (FSOC), which is charged with identifying and monitoring potential risks posed by “large, interconnected bank holding companies or nonbank financial companies” to the U.S. financial system. As part of that mission, FSOC commissioned a report from the U.S. Treasury’s Office of Financial Research (OFR) to inform its analysis of the asset management industry and determine if—and, if so, how—any asset management firms should be designated as systemically important financial institutions (SIFIs). If designated as SIFIs, such firms would be subject to enhanced supervision and bank-style regulation, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
The OFR’s report, “Asset Management and Financial Stability,” was released in September 2013. Upon its release, the Securities and Exchange Commission (SEC) took the unusual step of requesting comments. The Investment Company Institute responded in a comment letter outlining the many shortcomings of the OFR study.
ICI and its members remain committed to the promotion of financial stability; to sensible, deliberate, and data-driven regulation; and to advancing the public understanding of mutual funds. This resource center contains the latest news, analysis, and resources from ICI and others on the regulatory developments around financial stability and the asset management industry.
ICI Viewpoints Blog
- Simple Answers to the Federal Reserve’s QuandariesFeb 24, 2015
- Why Long-Term Fund Flows Aren’t a Systemic Risk: Understanding the Data on Institutional and Retail InvestorsFeb 20, 2015
- Why Long-Term Fund Flows Aren’t a Systemic Risk: Plus Ça Change, Plus C’est La Même ChoseFeb 19, 2015
- Why Long-Term Fund Flows Aren’t a Systemic Risk: Past Is PrologueFeb 18, 2015
- The IMF Makes All of OFR’s Mistakes—And MoreOct 10, 2014
- ICI Statement on Financial Stability Board Consultation to Examine Investment Funds and Asset Managers
Mar 4, 2015
- ICI Comments on Financial Stability Oversight Council’s Changes to Designation Process
Feb 5, 2015
- ICI Statement on FSOC Request for Comment on Asset Management and Financial Stability
Dec 18, 2014
- ICI Statement on SEC Chair White’s Speech on Asset Management Regulation
Dec 11, 2014
- ICI Statement on SEC Role in Financial Stability
Sep 8, 2014
Speeches and Statements
- Preserving the Unique Role of Asset Management
Sep 18, 2014
- ICI Statement for House Hearing: Examining the Dangers of the FSOC's Designation Process and Its Impact on the U.S. Financial System (pdf)
May 20, 2014
- Financial Stability: A Conversation with Investors
May 20, 2014
- Editorial: Why Designating Funds as SIFIs Could Hurt Retirees, American BankerMay 12, 2014
- Financial Stability and U.S. Mutual Funds
Mar 17, 2014