The Financial Stability Board (FSB) has published for public consultation Proposed Policy Recommendations to Address Structural Vulnerabilities from Asset Management Activities.
The consultation sets out proposed policy recommendations to address risks to global financial stability associated with the relevant structural vulnerabilities from asset management activities. The consultation begins with an overview of recent trends in the asset management sector and potential structural vulnerabilities from asset management activities. This is then followed by detailed discussion on each of the four structural vulnerabilities: liquidity transformation by investment funds; leverage within funds; operational risk and challenges in transferring investment mandates in stressed conditions; and securities lending activities of asset managers and funds. Within each section, the consultation describes the nature of the vulnerability, reviews the range of existing mitigants to address the vulnerability, identifies residual risks to the global financial system that warrant policy responses, and sets forth the proposed policy recommendations to address those residual risks.
The deadline for comments on the consultation is 21 September 2016.