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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
- Bloomberg Ignores the Evidence on Bond ETFsSep 26, 2014
- Securities Lending by Mutual Funds, ETFs, and Closed-End Funds: Are the Risks Systemic?Sep 18, 2014
- Securities Lending by Mutual Funds, ETFs, and Closed-End Funds: Regulators’ ConcernsSep 17, 2014
- Securities Lending by Mutual Funds, ETFs, and Closed-End Funds: The MarketSep 16, 2014
- Securities Lending by Mutual Funds, ETFs, and Closed-End Funds: The BasicsSep 15, 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