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From ESG to digital assets: The key trends reshaping the fund regulatory landscape

From ESG to digital assets: The key trends reshaping the fund regulatory landscape

28 June, 2023
Private Clients Private Capital

The investment landscape has been witnessing significant growth and evolving trends in recent years, including the emergence of new investment strategies, such as digital assets, and a heightened focus from investors on environmental, social, and governance (ESG) practices. Both of which are key in the ever-changing fund regulatory landscape.

Leevyn Isabel, Business Development Director at Ocorian, recently presented at the Jersey Finance & EAVCA Nairobi roundtable event where he highlighted the top regulatory trends that are reshaping the fund industry. 

What are the top regulatory trends in the fund industry?

1. Emphasis on investor protection

Regulatory authorities are focusing on enhancing transparency, disclosure, and accountability to protect investors. Fund managers are being encouraged to adopt more robust governance structures, risk management practices, and investor-focused policies.

2. Adoption of risk-based regulations

Risk-based regulations are gaining significant traction in the fund industry. These regulations require fund managers to assess and manage risks effectively, taking into account factors such as fund size, complexity, and investment strategy.

3. Emphasis on AML/CFT compliance

Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations impose strict compliance requirements on fund managers. Ensuring robust AML/CFT procedures is crucial but can be challenging due to evolving expectations and potential cross-border considerations.

4. Continued emphasis on ESG considerations

Regulatory frameworks are placing increased importance on ESG factors. Fund managers are required to integrate ESG considerations into their investment strategies, risk management practices, and reporting.

5. Adoption of sustainable finance frameworks

East African countries are embracing sustainable finance frameworks, encouraging the development of funds targeting sustainable projects and businesses. These frameworks attract investors focused on environmental and social impact.

6. Growing adoption of technology

The fund industry is witnessing a rise in digital funds, robot-advisory services, and crowdfunding platforms. Technology is transforming the way funds are managed, distributed, and accessed by investors.

7. Push for harmonisation of regulatory frameworks

There is a trend towards harmonising regulatory frameworks across fund jurisdictions. This allows for a more integrated investment market, facilitating cross-border fund offerings and investments. Harmonisation initiatives include aligning licensing requirements, disclosure standards, and investor protection regulations.

8. Enhanced supervision & enforcement

Regulatory authorities are strengthening their supervision and enforcement capabilities to ensure compliance with fund regulations. Regular inspections, audits, and investigations are conducted to monitor fund operations and detect potential misconduct. 

9. Enhanced regulation of digital assets

Regulatory authorities are expected to introduce specific regulations for digital assets, such as cryptocurrencies and tokenized securities. These regulations will provide clarity on the legal status of digital assets and guidelines for fund managers interested in incorporating them into their investment strategies.

How can Ocorian help?

Ocorian’s private capital team has proven experience administering flexible structures that help you meet your investment aims and take care of all reporting and regulatory obligations so you can concentrate on growing your wealth and sourcing new opportunities.

We bring together experts from across our business to support you in achieving your goals, whatever the investment vehicle, we will manage it in a way that lets you adopt your preferred strategy.

Find out more about our Private Capital offering here.