Who's afraid of BlackRock?

WITH US$4-5 trillion of assets directly under its control, BlackRock is a giant among giants in the financial world, and until recently was firmly under the eye of the Financial Stability Board (FSB).

Since the global banking crisis, the FSB has labelled 30 banks and nine insurers "systemically important financial institutions" or "too big to fail", insisting that they operate under greater scrutiny and regulations. For more than 12 months, it has been considering bringing large asset managers like BlackRock under similar regulatory control but backed down from this stance recently, falling in line with the International Organization of Securities Commissions (IOSCO), who deemed it more important to focus on understanding the risks posed by the sector as a whole rather than worry about specific large firms.

Their reasoning is based on the presumption that, unlike banks - whose loans and deposits go on their balance sheets as assets and liabilities - BlackRock and its ilk are mere managers of other people's money. As such, asset managers have control over the investments they hold on behalf of others.