Sunday, June 4, 2017

FSB Publishes its Sixth Annual Shadow Banking Survey

Sector Remains Robust and Growing Despite New Regulation

Author: David Schwartz

The Financial Stability Board’s (FSB) sixth annual shadow banking survey found that the shadow banking market remains robust and growing, equivalent to 13 percent of total financial system assets and 70 percent of the GDP of 28 covered jurisdictions. The report published May 10, 2017  presents the results of the FSB’s annual monitoring exercise to assess global trends and risks in the shadow banking system, reflecting data up to the end of 2015. It covers 28 jurisdictions, adding Belgium and the Cayman Islands for the first time. Notably, however, China failed to provide data for this latest report.[1] 

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Sunday, November 27, 2016

FSB Announces Priorities for 2017

Shadow Banking, G-SIFIs, and Asset Management are among FSB's 2017 priorities.

Author: David Schwartz

At its November 17, 2016 plenary session in London, the Financial Stability Board (FSB) met to discuss current vulnerabilities and agree on priorities for 2017.  While noting that the global financial system is more resilient as a result of the regulatory reforms introduced following the 2008 financial crisis, the FSB is keeping a close eye on areas of concern like high sovereign and corporate debt, asset quality and profitability issues faced by banks, and unfinished balance sheet repair in some parts of the financial system.  With these and other potential vulnerabilities in mind, the FSB has assembled a list of the areas upon which they plan to focus their attention in the upcoming year.

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Tuesday, September 27, 2016

SIFMA's Full-Throated Defense of Securities Lending

Author: David Schwartz

In a 65-page comment letter responding to the Financial Stability Board’s (“FSB”) June 22, 2016 consultation paper, "Proposed Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities,” SIFMA vigorously championed securities lending, and by extension, the asset management industry.  While supportive of the FSB’s recommendations, the lengthy comment letter explains in detail how the concerns expressed in the consultation, particularly with respect to securities lending, are already addressed by market practices, structures, and existing regulation.

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Sunday, July 24, 2016

FSB Chair Reports to the G20

While Much Progress has been Made, There is Much Left to Do

Author: David Schwartz

In a July 19, 2016 letter to the G20 Finance Ministers and Central Bank Governors ahead of their meeting July 23-24 meeting in Chengdu, Financial Stability Board Chair and Governor of the Bank of England Mark Carney updated the G20 leaders on the FSB’s progress made and priorities going forward.  While touting successes, he also said that there was work yet to be done and urged global regulators and standard-setters to finish the job of implementing post-crisis reforms.

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Sunday, June 26, 2016

FSB Publishes Policy Framework for “Vulnerable” Asset Management Activities

Urges Better Data on Securities Lending Indemnities

Author: David Schwartz

On June 22, 2016, the Financial Stability Board (FSB) published a consultation paper proposing a framework to address four areas it sees as structural vulnerabilities from asset management activities that could potentially present financial stability risks.  The consultation, Proposed Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities, proposes 14 policy recommendations to address four categories of structural vulnerabilities:

 

  1. liquidity mismatch between fund investments and redemption terms and conditions for fund units;
  2. leverage within investment funds;
  3. operational risk and challenges in transferring investment mandates in stressed conditions; and
  4. securities lending activities of asset managers and funds.
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