Mark Rantall

Financial Planning Standards Board Ltd. (FPSB), owner of the international CERTIFIED FINANCIAL PLANNER certification program, will hold a global meeting of its member organizations in Sydney from 23-25 October. The Financial Planning Association of Australia (FPA), which was the first organization to administer CFP certification outside of the U.S. beginning in 1990, will host FPSB and its member organizations from 24 territories for a two-day session that will focus on strategies to lead the financial planning profession.

“As the organization with the fifth largest population of CFP professionals in the world, FPA is pleased to welcome FPSB and its member organizations to Australia,” said Mark Rantall, CFP, CEO of FPA. “The meeting comes at a significant time for financial planning in Australia, as FPA works toward enshrinement of the term “financial planner” in law. Many of FPSB’s Members are also experiencing shifting macro-economic and regulatory environments, so we will have much to discuss as we look to grow the base of CFP professionals globally,” he added.

Peter Kell, deputy chair of the Australia Securities and Investments Commission (ASIC), is scheduled to address the group at a dinner on Wednesday, 23 October, and will provide insights into ASIC’s view of the Australian financial services marketplace and the role financial planning and CFP certification has to play. FPSB, which became an affiliate member of the International Organization of Securities Commissions (IOSCO) last year, will also discuss in Sydney how FPSB and FPSB Members can partner with regulators on oversight of the financial planning profession.

Representatives from FPSB’s Board of Directors and FPSB Members will also attend the FPA Professionals Congress, which takes place in Sydney from 17-18 October.

“We are pleased to bring FPSB’s international meeting to Sydney, where FPA continues to play a leading role in the global financial planning profession,” said FPSB CEO Noel Maye. “I want to thank Mark Rantall and FPSB Chairperson Steve Helmich, director of advice and client solutions at AMP, for their commitment to FPSB’s mission and for working so diligently with CFP professionals, firms and regulators to help put consumers in Australia in control of their lives through the use of personal financial planning.”

FPSB benefits the public by establishing, upholding and promoting worldwide professional standards in financial planning, and partners with organizations like FPA to offer CFP certification around the world. During the meeting in Sydney, FPSB Members will evaluate appropriate policies and professional standards for a profession, discuss the organization’s long-term strategy, developed in 2010, to sharpen focus for the next two to three years, and share best practices and trends. FPSB’s vision to establish financial planning as a distinct global profession, with the CFP marks its symbol of excellence, will guide discussions throughout the meeting.

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Australian hedge funds: no systemic risk to the Australian financial system: ASIC.

Australian hedge funds do not currently pose a systemic risk to the Australian financial system, an ASIC report released today has found.

Key points:

• Hedge funds ASIC identified manage only a small share of Australia’s $2.1 trillion managed funds industry with more than half of these holding less than $50 million each
• The survey indicates Australian hedge funds do not currently appear to pose a systemic risk to the Australian financial system
• Listed equities represent surveyed hedge fund managers’ greatest asset exposure, with 32% of this being in Australian-listed shares
• Surveyed qualifying hedge funds also use low leverage and appear to have adequate liquidity to meet obligations

The survey was representative of the state of the Australian hedge fund industry as a whole, with the assets of the 12 surveyed qualifying hedge funds representing approximately 42% of the assets held by single-strategy hedge funds in Australia.

Australian wholesale investors are the main investors in the surveyed funds. Their hedge-fund investment relative to their total investments is minimal, which tends to reduce systemic impact of any problems in the sector.

By asset class, listed equities (over US$19 billion) are the surveyed fund managers’ greatest gross exposures, with almost one-third of this being Australian equities. Equity derivatives and G10 sovereign bonds are the next two most significant asset classes, with exposures of US$8.2 billion and US$6.9 billion respectively.

Hedge fund redemptions exceeded applications in 2012, compared with the substantial inflows in 2010. However, the 2012 redemptions are unlikely to result in liquidity pressures because the average redemption size is relatively small as a percentage of funds’ net asset value.

The average time in which surveyed funds can liquidate 92% of their portfolio is less than 30 days. However, creditors can demand 99% of fund liabilities in less than 30 days. If the Australian market were subject to significant stress, the sector may struggle to meet redemption requests. However, this risk is offset by all the surveyed funds being able to suspend redemptions, if required.

Surveyed funds use relatively low levels of leverage, with synthetic leverage being the largest source in 2012. Average leverage, by gross market value as a multiple of net asset value, increased from 1.25 times assets in 2010 to 1.51 times assets in 2012.

Background

Hedge funds’ investments have in the past adversely affected the financial system by disrupting liquidity and pricing in markets (market channel risk) or by causing creditors to lose money (credit channel risk). The potential for systemic risk depends on the size, significance and interconnectedness of hedge funds.

In 2010 and 2012, the International Organization of Securities Commissions (IOSCO) called on members to survey their jurisdictions’ largest hedge fund managers to better understand the systemic risk these funds posed. In late 2012, ASIC surveyed hedge fund managers operating in Australia with more than US$500 million under management.

Download REP 370 here.

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