Thomas Piketty’s book ‘Capital in the 21st Century’ became a surprising bestseller earlier this year. It documents the increasing concentration of income and wealth in a few hands. And it raises the important concern that, because the rate of return on capital investment exceeds the growth of the economy, we face a future division of society into the ‘haves’ and the ‘have nots’ based on inherited wealth, with a return to the social conditions and class divide of Europe in the 19th century.
But, while there has certainly been an increasing concentration of wealth in recent years, it has little to do with high returns on capital investment, especially with high returns on investing inherited wealth. The fortunes of roughly 70% of those in the Forbes list of the richest 400 US citizens are self made. We are talking about people like Bill Gates of Microsoft, Mark Zuckerberg of Facebook, George Soros of the Quantum fund or Henry Kravis of KKR. (read more…)
New business environments and regulations have reshaped the financial sector. Three experienced forecasters shared their outlooks at the “Redefining The Financial Sector: The Industry Analyst’s View” panel held Monday at the SIFMA Annual Meeting in New York.
From the regulatory fate of high-frequency trading to the commoditization of asset management, these analysts discussed how the financial industry will adapt to the changing marketplace.
Exchanges haven’t won the battle against the big banks yet. Many observers expected exchanges to be the victors and large banks to lose business with the passage of the Dodd-Frank Act as more financial products will be forced to be increasingly transparent or traded on an exchange. “The fact is that this [trend] has been very slow to materialize,” said Daniel Fannon, Jefferies Group’s managing director for brokers, asset managers and exchanges.
Regulators have their sights set on high-frequency trading, but Fannon expects the scrutiny to be “data-driven, not politically driven.” He doesn’t foresee a large overhaul of high-frequency trading rather a fine-tuning that may make the market a little less complex than it currently is. (read more…)
Executives from PIMCO, TIAA-CREF and Neuberger Berman discussed the changing forces of regulatory policy on the asset management industry at the 2014 SIFMA Annual Meeting Monday in New York City. The cost of regulation, its effects on liquidity and the opportunities regulation creates for asset managers were major themes for the “Investing in a New Era: The View From The Buy-Side” panel.
All the panelists agreed that some of the new regulation created after the financial crisis has produce burdens for asset managers. “Good regulation has to allow for good growth,” said Douglas M. Hodge, PIMCO’s CEO. A lack of uniformity in regulation has made relatively nimble organizations, like asset managers, “much more functionally heavy,” said Robert G. Leary, president of TIAA-CREF Asset Management. “I’m not sure the benefits outweigh the costs,” he noted.
Regulation hasn’t been all bad for asset managers. Mid-sized asset managers have taken advantage of the tougher regulatory environment banks have faced by buying assets banks were forced to sell to meet higher capital requirements or comply with the Volcker Rule, said George H. (read more…)
The 2014 SIFMA Annual Meeting is right around the corner.
This event is truly a unique experience that serves as a one-stop resource for members and industry and market participants to receive updates on critical issues, as well as connect with colleagues and counterparts from throughout the business. Updates and news are provided by the primary sources of prominent policymakers and financial media.
Our speaker lineup this year is exceptional, and will feature one-on-one question & answer sessions with Mary Jo White, Chair, U.S. Securities and Exchange Commission (SEC), Michael R. Bloomberg, 108th Mayor of New York City and Founder, Bloomberg L.P.; David M. Rubenstein, Co-Founder and Co-CEO, The Carlyle Group and Gregory J. Fleming, President of Morgan Stanley Wealth Management , Morgan Stanley.
For the first time, as part of the general program, we are offering two sessions that take a deeper-dive into particular areas of interest to our community. (read more…)