- First and foremost, this
covers a meeting between the SEC, major banks and asset managers on background, but leads with the suggestion that
the SEC is likely to extend the 30-month no action letters
that allow US broker-dealers to receive payments from MiFID-regulated asset owners without fully “unbundling.” Note that
there’s no official SEC comment, either on the policy or the possibility of the timing being a three-year extension
, but it’s worth keeping a close eye on as the official exemption runs out in July 2020, meaning it’s likely a decision that will happen late this year to give investors and banks certainty.
- Last week’s angle on buy-side M&A from Deloitte has a counterpoint in this week’s
, from a UK group called the
New City Initiative that’s advocating for regulation to limit asset management M&A in order to preserve investor choice
. Research from NCI suggests asset owners that allocated to only boutiques have generated more wealth than those allocating
to larger firms, and an
Affiliated Managers Group
study also suggested that smaller asset managers generated an average of 62 bps of outperformance versus larger managers. Either way, even excluding passives, scale does benefit active managers on the cost side, but the jury may still be out on the revenue side. A smaller manager that generates strong performance is still able to grow its asset base today, and smaller managers produce diverse shareholder bases…but in the long run it may take some level of regulation to keep the active community from excessive concentration.