Fund Managers Hire Compliance and Legal Staff09.09.2014
Headcount rose by 3.4% last year amongst members of The Investment Management Association, which represents UK fund managers, with the largest increase in compliance, legal and audit staff.
The latest annual Asset Management Survey from the IMA for 2013 said that total average industry revenue, net of commission, rose to £15bn last year from £13bn in 2012. UK assets managed by IMA member firms grew by 13% last year to reach £5 trillion with 40% managed on behalf of overseas clients.
The survey is based on responses from 72 IMA member firms, who manage a total £4.3 trillion in the UK.
The report said direct industry headcount increased by 3.4% to 31,800 which was in line with asset growth since the financial crisis and the regulatory environment.
“The largest increase, on a matched basis, has been in the compliance, legal and audit function, which has registered an increase of 48% since 2008,” added the IMA. “However, the vast majority of this increase is attributable to the last 12 months alone, since the 2013 total has gone up by 40% relative to that reported in 2012.”
The survey said that new regulations on a national, regional and global level, have boosted growth across many staff sectors as firms face greater operational complexity and regulatory compliance requirements.
The new regulations include MiFID II which covers trading and market structure in the European Union. MiFID II requirements include post-transaction price transparency and restrictions on the use of dark pools.
“The crucial question will be how tightly these constraints operate,” added the IMA. “For post- trade transparency, even with exemptions for transactions that are ‘large-in-scale’, the industry is concerned that there will still most likely be a reduction in capacity, which is unlikely to be offset by a narrower bid-offer spread for transactions in smaller size.”
MiFID II has also delayed the creation of a meaningful and affordable consolidated tape of European equity price information. “Based on the last disseminated price for the shares in question, such a record is helpful to the nurturing of a Europe-wide equities market,” added the IMA.
The survey found there was an increasing shift away from dependence on UK clients with the proportion of assets managed for UK headquartered firms falling from 57% to 45% in the last decade.
Last year equities investments rose to 46% from 42% in 2012 while fixed income fell to 34% from 37% which the survey said consistent with market movements rather than a major allocation shift.
In the past six years the relative size of the ‘other’ asset category has increased from 3% in 2007 to 11% at the end of 2013.
“Alternative assets such as private equity and commodities constitute part of this category, but the growth is largely attributable to the increasing use of derivatives to deliver strategies such as currency overlay and liability driven investment,” added the IMA.
Firms subject to the EU clearing obligation will need an active account at an EU CCP.
DLT could be expanded to trading and clearing/settlement of more liquid listed and OTC products.
Customers get margining efficiencies by clearing indices and their single name constituents as packages.
Information on trade status is important as more frequent volume spikes create processing bottlenecks.
Euronext will manage the entire trading value chain and aims to increase its footprint in post-trade.