Statement on Financial Stability Oversight Council's Review of Asset Management Products and Activities

Chair Mary Jo White

April 18, 2016

I support the publication of the Council's Update Statement on its review of asset management products and activities for potential financial stability risks. The summary of analysis set forth in the update gives a current snapshot of FSOC's work in this area, which the Council is making public today.  I commend that transparency and the tireless work of the staff that has led to today's update. 

As I have commented before, I believe FSOC's work on this topic is complementary to the regulatory reforms the SEC is currently undertaking in our oversight of the asset management industry as I announced and described in December 2014.[1]

Since 1940, under the authority of the Investment Company Act and Investment Advisers Act, the SEC has been the primary regulator of the vast majority of the asset management industry.  And we are currently engaged in a very consequential set of initiatives to modernize and enhance our asset management regulatory regime, including in the areas of enhanced reporting of data, liquidity risk management and use of leverage, on which the Commission issued four rule proposals in 2015.[2]  Those proposals are outstanding, and I expect proposals on transition planning and stress testing to follow.

Although there is overlap in the topics covered in FSOC's update and the SEC's proposed reforms, it should be understood that the SEC's analysis of foundational asset management issues, including liquidity management and use of leverage, is set forth in the Commission's proposals and accompanying white papers of the SEC's Division of Economic and Risk Analysis.[3]  In developing the SEC's final regulations, we will consider and rely on our analysis of the input we receive from the public through the notice and comment process.  Today's FSOC update thus should not be read as an indication of the direction that the SEC's final asset management rules may take.

The Council views set forth in the update describe certain relevant principles and next steps for consideration.  The topics it takes on are complex, nuanced and dynamic.  This exercise has also highlighted for me other important issues not directly or solely within the SEC's jurisdiction, some of which were raised by commenters on the Council's request for public comment – including the interaction of asset managers with other financial institutions, the use of economic substitutes across the industry, and the behavior of market participants both before and after the financial crisis. Careful examination of these and other issues by both FSOC and the relevant regulators is important for analyzing both risks to financial stability and the materiality and likelihood of such risks.

I again commend the staff's hard work, and look forward to continued dialogue with my colleagues on the Council.

[1] See Chair Mary Jo White, "Enhancing Risk Monitoring and Regulatory Safeguards for the Asset Management Industry," Dec. 11, 2014, available at

[2] See Investment Company Reporting Modernization, Investment Company Act Release No. 31610 (May 20, 2015), available at; Amendments to Form ADV and Investment Advisers Act Rules, Investment Advisers Act Release No. 4091 (May 20, 2015), available at;  Open-End Fund Liquidity Risk

Management Programs; Swing Pricing; Re-Opening of Comment Period for Investment

Company Reporting Modernization Release, Investment Company Act Release No. 31835 (Sept.

22, 2015), available at; Use of Derivatives by Registered Investment Companies and Business Development Companies, Investment Company Act Release No. 31933 (Dec. 11, 2015) , available at

[3] See Paul Hanouna, et al., Liquidity and Flows of U.S. Mutual Funds (Sept. 2015), available at; Daniel Deli, et al., Use of Derivatives by Registered Investment Companies (Dec. 2015), available at