The Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) has published its latest consultative document concerning the proposed assessment methodologies for identifying non-bank non-insurer global systemically important financial institutions (NBNI G-SIFIs). The consultative document builds on the earlier consultative document that the FSB and IOSCO published in January 2014.
The document first explains how the financial distress or disorderly failure of an NBNI financial entity could be transmitted to other financial entities and markets, and thereby pose a threat to global financial stability. It then sets out a high-level framework for identifying NBNI G-SIFIs and the implementation approaches that will apply across all NBNI financial entities. Descriptions of NBNI sector-specific methodologies are given for: (i) finance companies; (ii) market intermediaries (securities broker-dealers); (iii) investment funds (including hedge funds); and (iv) asset managers. Finally, the document provides a methodology for assessing the global systemic importance of other NBNI financial entities (or entity types) as a “backstop” to identify any potential G-SIFIs not captured by the above sector-specific NBNI G-SIFI methodologies.
The deadline for comments is 29 May 2015.