General

ESMA has issued guidance for investment firms using AI, emphasising client best interests, to ensure compliance with MiFID II and safeguard investors. Below is a summary of that guidance.

The advancement of Artificial Intelligence (AI) offers transformative opportunities in retail investment services, enhancing efficiency, innovation, and decision-making. However, AI also presents risks such as algorithmic biases, data quality issues, and transparency challenges. Despite the initial phase of AI diffusion, its impact on firms’ behaviours and retail investor protection is expected to be significant. Management bodies retain responsibility for decisions, whether made by humans or AI.

The attractiveness of diversified, liquid, continuously priced, low-cost instruments to investors has never been greater. The growth in ETF AUM globally from around $1 trillion in 2008 to around $14 trillion at the end of 2023 shows the size of the inroad this asset class has made in a relatively short period. As Investment Managers wrestle with cost pressures across the industry, they are increasingly looking at adding ETFs as a complementary offering.

Mastering fund and product data is not just about operational efficiency; it’s fast becoming a regulatory imperative. It is becoming increasingly apparent that a mature data master is critical to meet everchanging regulatory requirements.

On 14th May, ESMA published its final report on funds’ names using ESG or sustainability-related terms. This followed feedback and changes made to the original consultation. At 57 pages it is a hefty read, but there are some important changes to note within the text.

Some of the key points where changes have been made because of the responses to the consultation include: –

A year ago, we wrote post on Linked In called “Barriers to ESG in the Asset Management Industry.” It was a brief article, but it talked about three distinct key areas that were (at the time) key factors inhibiting the progress of ESG. We thought that (one year on), it would be interesting to revisit those three items, and talk about the progress that has been made

Here at ISC, we recognise the importance of increasing our awareness and understanding of stroke and its impacts. This month, we have a story to share. Our team member, Paul Lumsden, is a stroke survivor, and his journey offers an insight into some of the challenges faced by those affected by stroke.

By sharing his story, we hope to highlight the realities of the side effects of stroke, particularly the hidden effects, which encourages more people to stay informed and supportive.

UK asset managers will be busy during 2024 with SDR coming into force. The timeframes are relatively tight, and firms have a lot to consider for the three critical milestones occurring this year.