The Managed Funds Association (MFA) is encouraging the UK Financial Conduct Authority (FCA) and the UK Prudential Regulatory Authority (PRA), to enhance the UK capital markets by eliminating redundant securitisation due diligence regulations.
The MFA has submitted two letters to the regulatory bodies outlining why it believes that removing duplicative regulations will increase capital investment in the UK and optimise risk management on behalf of UK investors.
The letters explain that duplicative due diligence requirements for securitisation will continue to place UK-based fund managers at a competitive disadvantage to managers in the US and other non-EU countries.
According to the MFA, limiting UK-based manager access to foreign US securitisation markets has impeded their ability to manage risk and deliver returns for their investors, and has also dampened alternative investment fund managers (AIFMs) participation in the securitised markets generally, preventing UK capital markets from recovering more fully from the global financial crisis.
The letters highlight that while AIFMs are subject to the robust requirements from the Alternative Investment Managers Directive (AIFMD), they also have to comply “duplicative requirements” from the Securitisation Regulations. The MFA believes that these regulations are better suited to market participants, such as banks and insurance companies, that mainly serve a domestic client base of retail investors and are not subject to the AIFMDm and wants AIFMs to be excluded from the additional due diligence requirements when investing in securitisation.
