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Today New City Initiative is comprised of 43 leading independent asset management firms from the UK and the Continent, managing approximately £500 billion and employing several thousand people.

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COVID-19

Published by Charles Gubert

The rapid – and sudden - spread of the Covid-19 virus has not only caused unimaginable volatility in financial markets but it is forcing investment firms – including boutique asset managers - to implement their worst-case scenario contingency plans. The levels of disruption being caused by Covid-19 is unprecedented in modern times, and sadly there will be casualties, even among once healthy and well-run fund management businesses. Collaboration will be absolutely pivotal if the industry is to get through this turbulent period.  

What is NCI doing?

Fund managers are facing threats on a number of different fronts, and it is likely – at least in the short-term – that their preparations for incoming regulations could be jeopardised. This has been tacitly acknowledged by regulators. For instance, the European Securities and Markets Authority (ESMA) – following industry lobbying - has given financial institutions an additional three months to comply with the phase 1 reporting of securities financing transactions under the Securities Financing Transaction Regulation (SFTR). Elsewhere, ESMA has also delayed the introduction of the MIFIR tick-size regime for systematic internalisers.

NCI firmly welcomes both reprieves, but it is equally conscious that its membership’s planning efforts for other regulatory deadlines – including the fifth phase of EMIR’s (European Market Infrastructure Regulation) margining obligations for bilateral OTC (over-the-counter) derivatives; the Shareholders Rights Directive II (SRD II); and LIBOR reform – may come under stress during the coming weeks and months. NCI is not yet calling for these regulations to be deferred, but its position could change if the Covid-19 situation worsens.

Consequentially, NCI will be engaging with its membership on regulatory policy over the next few months. Moreover, it will also be reaching out to members (anonymously) to gauge their views on how the government/regulators can help mitigate some of the damage that Covid-19 is causing to their businesses, through say, loosening specific regulations or temporarily easing reporting requirements. NCI’s findings will subsequently form the basis of a white paper, which will be circulated internally and externally.

Sharing best practices

Covid-19 has highlighted to NCI’s membership the importance of having a comprehensive business continuity plan (BCP) in place. In fact, BCP and operational resiliency have been areas of interest for the Financial Conduct Authority (FCA) for almost a decade now. NCI is fully aware that different members will have their own unique approaches towards BCP, and it would like to know (anonymously) how organisations’ contingency plans have fared so far. These findings will then be used to produce a white paper on BCP best practices, which will be circulated both internally and externally.

NCI will also be conducting a series of webinars, which members can listen into, exploring some of the wider challenges (i.e. operational resiliency, ongoing regulatory changes; managing client communications; protecting employee wellbeing; ensuring robust corporate governance standards) facing the industry as a result of Covid-19. Details of these webinars will be provided shortly. By engaging with membership regularly and sharing their broader concerns with the relevant bodies and policymakers, NCI can continue to support the interests of boutique, owner-managed investment firms during this difficult period.