On 18 December 2024, the Financial Stability Board (FSB) issued a consultation report on proposed policy recommendations to its members and standard setting bodies on leverage in non-bank financial intermediation (NBFI).
Entities in scope of the proposed recommendations are non-bank financial firms that use leverage, either financial or synthetic, including hedge funds, other leveraged investment funds, pension funds and insurance companies. Where relevant, banks and broker-dealers are also in scope in their role as leverage providers.
The proposed policy recommendations cover:
- Risk identification and monitoring, supported by a suite of risk metrics, and work to assess and address data challenges.
- Measures to address financial stability risks related to NBFI leverage in core financial markets, including measures that affect specific activities, types of entities, and concentration-related risks.
- counterparty credit risk management and private disclosure.
- Addressing inconsistencies by adopting the principle of “same risk, same regulatory treatment”.
- Enhancing cross-border cooperation and collaboration.
The deadline for comments on the consultation report is 28 February 2025. A final report will be published in mid-2025.