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Systemic risk – the big divide

Systemic risk – the big divide

Nowhere is the difference in approach of the US and the rest of the world clearer than in the systemic risk debate. Where once, Dodd-Frank and MiFID/MiFIR progressed in lockstep, today views on the systemic risk that investment funds present could hardly be more divergent.

Outside the US, the ongoing application of a banking policy mindset to open-ended funds is creating considerable tension within the global industry.

The FSB issued 14 policy recommendations to address what it describes as structural vulnerabilities from asset management. It is revisiting assessment methodologies for identifying non-bank, non-insurance globally systemically important financial institutions (NBNI G-SIFIs) - a major bone of contention for the industry. 

Meanwhile, IOSCO has issued revised guidelines on liquidity risk management in funds and is working towards globally-accepted measures of leverage.

Download the chapter here (PDF 319.5 KB), the Executive Summary here (PDF 404 KB) or the full report here (PDF 2.12 MB). 

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