Bloomberg News

Ontario Fund Says Rules Uncertainty Spurs Market Paralysis

October 20, 2011

(Adds comments from CEO starting in second paragraph.)

Oct. 20 (Bloomberg) -- New market regulations have confused and stymied pension funds and other investors, said Jim Leech, chief executive officer of the Ontario Teachers’ Pension Plan.

“There’s a lot of paralysis out there, and it’s a paralysis of uncertainty,” Leech said today during a conference in Toronto held by the Global Risk Institute. Such burdensome and “unnecessarily complex” proposed rule-making “slows an institution’s ability to be nimble just at a time when they need it.”

Financial firms worldwide face tougher regulations designed to reduce the danger of another global financial crisis after the 2008 failures of Bear Stearns Cos. and Lehman Brothers Holdings Inc. The Basel Committee on Banking Supervision has added new global rules, and countries such as the U.S. have passed their own laws such as last year’s Dodd-Frank Act to curtail activities of financial firms.

“Right now it’s a question of what are these rules going to be,” Leech told reporters after the event. “There are lots of questions and not a lot of answers.”

The lack of clarity on the next wave of market regulation is compounded by uncertainty in the economy, Leech said.

“You’ve just got one uncertainty upon another, upon another, upon another, and it causes a lot of market participants to be frozen,” he said.

Yesterday, BlackRock Inc. CEO Laurence D. Fink said a crisis of “confidence” has prompted clients to delay investment decisions. The New York-based firm said its new business pipeline of $65.2 billion will shrink because one institutional investor plans to end a $36 billion assignment and manage it internally to cut costs.

Ontario Teachers’, with C$107.5 billion ($105.5 billion) in assets, is responsible for investing and managing pensions for about 295,000 active and retired teachers in Canada’s most populous province.

--Editors: Josh Friedman, Larry Edelman

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Christian Baumgaertel at cbaumgaertel@bloomberg.net


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