On January 20, 2020, the UK’s Financial Conduct Authority (FCA) sent a brief but blunt letter to the CEOs of asset management companies. The regulator did not mince its words. In the letter’s opening paragraphs, the FCA criticised corporate governance standards at asset managers as being unsatisfactory. The regulator then told asset managers that they did not deliver value to retail customers and had failed to invest adequately in their operational resilience and technology, which it said “could cause harm to market integrity or loss of sensitive data.” This warning shot from the FCA should not be taken lightly by…

Liquidity As returns on traditional investments declined, a handful of fund managers sought out illiquidity premiums by accumulating exposures to hard to sell assets.  While such an investment approach can be justifiable under some circumstances, it can be quite risky as a number of retail and institutional clients discovered to their misfortune in 2019, many of whom remain trapped in funds which were originally sold to them as being daily dealing.The Woodford Equity Income Fund – for obvious reasons – was the best documented example of investors being left unable to access their capital after it was revealed that a…

With 2020 rapidly approaching, New City Initiative (NCI) takes a look at some of the key issues, which could potentially impact its members over the course of the next 12 months.Liquidity risk will not be overlooked in 2020Few would dispute the entire Woodford episode has sullied the reputation of the UK Financial Conduct Authority (FCA). Not only has this whole incident cast a shadow over the FCA, but it is likely to prompt the regulator into adopting a firmer line on the asset management industry. It is very probable the FCA (and other regulators) will now take a much closer…

As an international financial hub, Singapore is widely considered to be among one of the world’s leaders, but the country has yet to become a top-tier fund domicile.  Even though some domestic funds do domicile themselves in Singapore, the local market continues to be overshadowed by offshore centres such as the Cayman Islands, Luxembourg and Ireland. However, the Monetary Authority of Singapore (MAS), the country’s financial services regulator, is trying to change this with the launch of the Variable Capital Company (VCC).The VCC: Taking away some of the offshore pieThe majority of Singaporean funds have historically been structured as one…

Two years ago, cryptocurrencies such as Bitcoin exploded onto the scene. As more retail investors started piling into this nascent asset class, its price reached unfathomable heights, only to plunge dramatically not long after. Happening in parallel to the cryptocurrency bubble was the sudden proliferation of initial coin offerings (ICOs), best described as an unregulated crowdfunding device popular among (some) technology start-ups, which leverages blockchain to raise funds from investors through the issuance of cryptocurrencies.Most institutional asset managers chose not to invest in cryptocurrencies or ICOs as the instruments were seen as being largely unregulated and vulnerable to fraud, money…