The ‘systemic risk’ label imposed on General Electric by US regulators which forced the giant to shed its financial wing and global leasing arm, has been criticised by the UK regulator, the Financial Conduct Authority (FCA).
In an interview with the Financial Times (FT), Martin Wheatley, head of the FCA, said global regulators faced "big questions" that needed to be answered before determining to which organisations the label applied.
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Speaking about asset managers as part of a broader spectrum of investors putting money to work across bonds, equities, currencies, loans, property and other asset classes, Mr Wheatley told the FT:"I’d find it perverse if we ended up putting handcuffs in a set of players in markets – the asset managers- just because they’re regulated and we know them, and yet allow people on the lakeside in Switzerland and sovereign wealth funds in the Far East and central banks to play with free rein in those markets.
"My view is that it is not the players that are systemic, generally, it’s the market that they operate in," Wheatley told the FT. "So you’ve only constrained one set who themselves represent maybe 15% of liquidity flow in markets."
Global regulators have already designated some clearing houses, insurance companies and banks, such as BNP Paribas, ING Bank and Nordea, as systemically important.
