As policy makers and regulators scan the financial horizon for future systemic risks, they are looking beyond the traditional locus of banks and insurance companies towards the capital markets and large asset managers. This shift is appropriate. Capital markets – and the asset managers operating within them – play a major and growing role in intermediating between savers and borrowers. As Mark Carney, governor of the Bank of England, noted in his recent FT piece on shadow banking , “an effective financial system needs intermediation outside the traditional banking sector.” In this context, it is important to understand the roles of asset managers in facilitating asset ownership and how those managers interact with markets. Continue reading »
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