Systemic Risk in Asset Management

Completed

The project evaluated the Systemic Risk Management topic in the Asset Management & Custody Activities Standard, including improvements to the scope of the topic and the associated accounting metrics.

Sector
Financials
Issues
Risk
Project Status
Completed

Project Overview

Project Objective

The project evaluated the Systemic Risk Management topic in the Asset Management & Custody Activities Standard, including potential improvements to the scope of the topic and the associated accounting metrics.

Standard-setting Project Outcome

On December 6, 2021, the SASB Standards Board issued updates to the Asset Management & Custody Activities Standard in connection with the Systemic Risk in Asset Management standard-setting project with removal of the Systemic Risk Management disclosure topic and its associated metrics (FN-AC-550a.1, FN-AC-550a.2, FN-AC-550a.3, and FN-AC-550a.4).

The Board arrived at its decision based on the following primary considerations:

  • Feedback from most companies and investors suggested that the Systemic Risk Management disclosure topic, as currently framed, may not reflect the sustainability impacts created by the operations and business activities of asset management companies.
  • Stakeholder consultations and public comments did not identify actionable recommendations for accounting metrics that would measure performance on the Systemic Risk Management disclosure topic in either its current or alternative forms.

The update is exclusively related to the Asset Management & Custody Activities Standard. The Board notes that the changes described above and as reflected in the updated Standard do not affect the Systemic Risk Management disclosure topic or the associated metrics in the SASB Standards for the following industries: Commercial Banks, Insurance, and Investment Banking & Brokerage.

Project Background

Two out of four accounting metrics under the Systemic Risk Management topic in the Asset Management & Custody Activities industry standard may no longer satisfy three of the criteria for metric selection as specified in the SASB Conceptual Framework: fair representation, usefulness, and alignment. Additionally, changing product trends within the industry that are not currently captured by the standard may contribute to, or result in, exposure to systemic risk. Therefore, the current content of the standard is not adequately measuring performance on the topic and does not provide decision-useful information to investors. For more project background, please read our call for feedback.

Project Status

  • Phase 1 - Completed
  • Phase 2 - Completed
  • Phase 3 - Completed
  • Phase 4 - Completed
  • Phase 5 - Completed
  • Phase 6 - Completed
  • Phase 7 - Completed

Current Status

The Systemic Risk Management disclosure topic and its associated metrics was removed from the Asset Management & Custody Activities Standard in December 2021. You may download the latest version of the Standard at https://sasb.wpengine.com/standards/download/.

Next Steps

This standard-setting project has concluded in December 2021 with the release of the updated Asset Management & Custody Activities Standard.

Published Documents & Supplemental Materials

Published Documents

Supplemental Materials

Comment Letters

Comment letters are received as part of the public comment period between March 16, 2021 and June 15, 2021. Comment letters are posted in the order of receipt. Please note that it can take up to two weeks for comment letters to be posted.

Board Materials & Decisions

Board Meeting Outcomes

October 2021

  • Staff presented the key themes that emerged from received public comment letters, which were consistent with market input staff has received throughout the project, and further validate the prior research, consultation, and analysis that led to the proposed changes in the exposure draft.
  • Staff recommended that the Board update the Asset Management & Custody Activities Standard by approving the changes proposed in the exposure draft, i.e., the removal of the Systemic Risk Management disclosure topic and associated metrics, which the Board was receptive to.
  • Next steps in the project will consist of the Board reviewing a revised basis for conclusions and proceeding to a final vote on the Standards update.

December 2020

  • Staff presented preliminary conclusions from research and stakeholder consultation.
  • Staff articulated two recommendations it is considering—the potential removal of the existing disclosure topic and the assessment of a new disclosure topic. The Board discussed the merits of these recommendations and the implications for the existing project. General agreement was expressed by the Board with some specific concerns cited.
  •  Next steps in the project include continued discussions with Board members and the potential development of an exposure draft for public comment.

June 2020

  • The Board made a preliminary decision to remove accounting metric FN-AC-550a.1 from the Asset Management & Custody Activities Standard, which calls for a breakdown of open-end fund assets by liquidity category.

December 2019

  • The Board unanimously agreed to add a project on Systemic Risk in Asset Management to its standard setting agenda

Board Materials

For a full list of past and upcoming Standards Board meetings, as well as associated materials, please visit our Board Meetings Calendar & Archive.

The staff has prepared this summary for informational purposes only. Any Standards Board decisions are tentative and do not change current accounting. Official positions of SASB are determined only after extensive due process and deliberations.