Crypto-assets, the growth of the ETF space, trade, and Brexit are among the top concerns facing global policymakers and the capital markets, reports Ian Russell, president and CEO of the Investment Industry Association of Canada (IIAC).
In his latest letter to the industry, Russell details some of the top concerns for the global financial industry heading into 2019, based on recent meetings of the International Council of Securities Associations and the Fixed Income Currencies and Commodities Markets Standards Board in London earlier this month.
Russell notes that the umbrella group of global regulators, the International Organization of Securities Commissions (IOSCO), has highlighted the evolving crypto-asset marketplace as one of its key concerns due to a “notable increase in firms offering retail OTC leveraged products” based on crypto assets. IOSCO also stated that the online distribution of cryptocurrencies “poses a significant risk to investor protection.”
Another top concern is the concentration of ETF assets in institutional portfolios, which, Russell reports, is a high priority for both IOSCO and the Financial Stability Board, along with issues such as bond market liquidity and leverage levels at non-bank financial institutions.
Additionally, he states, “the continued disintegration of the multilateral trading order impairs the efficient functioning of global markets and risks market fragmentation.” This stems from a variety of sources, including ongoing trade actions driven by the U.S., including its withdrawal from the Paris Agreement on Climate Change and from the Trans-Pacific Partnership, and China’s trade practices. Perhaps the most serious concern is the possible impact of Brexit on the European economy and financial markets.
“The global capital markets will be on edge over the next several months as Brexit negotiations reach a climax in the lead-up to the March 2019 deadline for a formal agreement,” Russell states in his letter.