The Financial Stability Board will wait to finalize the methodologies for delegating money managers as systemically important financial institutions until its work on risks from money management activities is complete, said the regulator.
The FSB announced its decision Thursday, and said the delay will allow further analysis of potential financial stability issues that are associated with money management firms and their activities.
The decision follows an announcement in June by the International Organization of Securities Commission, which had been working with the FSB on comment papers and the development of such methodologies, that its board had decided a full review of money management activities and products should be “the immediate focus of international efforts to identify potential systemic risks and vulnerabilities.”
The bodies’ work on financial stability risks from money management activities began in March, and focuses on risks that are associated with market liquidity. It also looks at money management activities for vulnerability in terms of systemic risk, and for potential structural sources of vulnerability.
The FSB said it will discuss initial findings at a meeting in September. It will develop activities-based policy recommendations by spring 2016. Work then will begin on conducting analysis and finalizing the non-bank, non-insurer global systemically important financial institution money management assessment methodology, “with a focus on any residual entity-based sources of systemic risk from distress or disorderly failure that cannot be effectively addressed by market-wide activities-based policies,” said the statement.