Red tape accused of killing off innovation in asset management

Tim Wallace
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A FLOOD of new rules governing what asset managers can invest in has squeezed the dynamism and diversity from the sector, according to a report from technology firm SunGard published today.

The cost of compliance with rules like Dodd Frank and the Alternative Investment Fund Managers’ Directive mean only the very biggest can really compete and attract investors, the report said.

“The irony here is that boutiques pose less systemic risk than large institutional managers, yet due to the high cost of compliance and a proliferation of regulation they are the ones under greatest threat.,” said SunGard’s Ed Lopez.

“So whilst the too big to fail firms continue to raise assets, boutiques run the risk of being too small to succeed.”