# Britain’s post-Brexit asset management revamp eyes liquidity, tokenisation Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-02-20 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: Britain's Post-Brexit Plan to Revamp Asset Management Rules Meta Description: Explore the implications of Britain's regulatory overhaul for the £11 trillion asset management sector post-Brexit, focusing on liquidity and global URL: https://financedigest.com/britains-post-brexit-asset-management-revamp-eyes-liquidity-tokenisationhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-02-20t093831z2lynxmpej1j07rrtroptp4britain-economy-1736814428412-compressed.jpg) By Huw Jones LONDON (Reuters) -Britain set out plans on Monday for a post-Brexit review of its rules for the 11 trillion pound ($13.2 trillion) asset management sector, with a focus on bolstering liquidity after a near meltdown in funds used by pension schemes last September. Until Britain’s departure from the European Union in 2020, rules for the UK funds sector were written in Brussels. [Brexit means](https://www.financedigest.com/what-brexit-mean-for-british-buyers-in-spain.html "WHAT BREXIT MEAN FOR BRITISH BUYERS IN SPAIN") UK regulators can write their own regulations, but the Financial Conduct Authority (FCA) makes clear in its broad review it will stick to “strong international standards” given Britain’s global role in asset management. The [sector has fallen short in dealing with stresses in recent years](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors") in Britain and elsewhere due to inadequate liquidity, prompting scrutiny globally. [Property funds were suspended in the immediate aftermath of Britain’s 2016 vote to leave the EU and when the economy went into lockdown to fight COVID-19 in March 2020 as investors sought to pull out their money](https://www.financedigest.com/ethical-property-investment-can-your-money-do-more.html "Ethical property investment: Can your money do more? "). So-called liability-driven investment (LDI) funds, used by pension schemes to ensure long-term payouts to pensioners, struggled to [meet cash calls last September when UK government bond prices](https://www.financedigest.com/eu-meets-to-try-to-break-gas-price-cap-impasse.html "EU meets to try to break gas price cap impasse") tumbled. The regulatory framework contains rules around [liquidity management](https://www.financedigest.com/strategies-banks-use-to-manage-liquidity-risk.html "Strategies Banks Use to Manage Liquidity Risk"). Many of these rules are designed to protect [consumers,” the FCA said in a discussion paper on reforming the sector](https://www.financedigest.com/consumer-durables-sector-still-feeling-the-effects-of-recession.html "Consumer durables sector still feeling the effects of recession"). But the growth of the fund industry means that liquidity [management in funds is also relevant to the good functioning of markets,” the discussion paper out for public consultation](https://www.financedigest.com/wealth-management-consultant.html "Wealth management consultant") said. Chris Cummings, chief executive of industry body the Investment Association, said the paper acknowledges the [sector is already](https://www.financedigest.com/uk-tourism-sector-already-reaping-the-benefits-of-brexit.html "UK TOURISM SECTOR ALREADY REAPING THE BENEFITS OF BREXIT") highly regulated. The need for more [rules must be balanced against ensuring Britain](https://www.financedigest.com/britain-plans-new-data-rules-to-ease-compliance-burden.html "Britain plans new data rules to ease compliance burden") remains globally competitive, he said. The paper also considers how rules could be adapted for tokenised or digitised units in funds, meaning [assets under management](https://www.financedigest.com/french-watchdog-fines-h2o-asset-management-executives-over-tennor-investments.html "French watchdog fines H2O Asset Management, executives over Tennor investments") split into fractions to make it more affordable for small investors. With no cemented new proposals put forward, the next three months should give the industry the time to fly a kite on some Brexit dividend proposals,” Kevin Doran, [managing director of AJ Bell Investments](https://www.financedigest.com/anyone-can-write-assignment-need-people-able-apply-new-skills-workplace-says-top-investment-management-company.html "“Anyone can write an assignment, but we need people to be able to apply their new skills to the workplace,” says top investment management company"), said. Although Britain has left the EU, many of the money [market funds](https://www.financedigest.com/market-turmoil-a-boon-for-trend-following-hedge-funds.html "Market turmoil a boon for trend-following hedge funds"), LDI funds and mutual funds offered in the UK are listed in EU centres such as Dublin and Luxembourg, even if managed in London. The FCA said it wants to see [fund managers](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management") complying with liquidity stress testing guidelines issued by the EU’s securities watchdog ESMA, which will be converted into UK rules. A public consultation is open until May, after which the FCA will [focus on priority areas for changes](https://www.financedigest.com/the-changing-focus-for-cfos.html "The changing focus for CFO’s"). ($1 = 0.8310 pounds) (Additional reporting by Iain Withers; Editing by Shounak Dasgupta) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---