11 May 2017
London
Reporter: Drew Nicol

Shadow banking on the up, says FSB


The value of the global ‘shadow banking’ market increased in 2015 to now stand at $34 trillion, according to the Financial Stability Board (FSB).

The Global Shadow Banking Monitoring Report 2016, released this week, revealed that the alternative financing market was equivalent to 13 percent of total financial system assets and 70 percent of the GDP of 28 covered jurisdictions.

The report is the FSB’s sixth annual study aimed at assessing global trends and risks in the shadow banking system, reflecting data up to the end of 2015.

There were a number of firsts in the 2016 report, including the addition of data from Belgium and the Cayman Islands, bringing the total number of jurisdictions to 28.

Another new feature of this report was the collection of data to measure interconnectedness among the bank and the non-bank financial sectors to assess the trends of short-term wholesale funding, including repos.

The FSB clarified repeatedly during its analysis that data availability needs to be improved. It did highlight that, on an aggregated basis, both banks’ credit exposures to and funding from ‘other financial intermediaries’ have continued to decline in 2015, although they remain above the levels before the financial crisis.

Mark Carney, chair of the FSB, said in his letter to the G20 finance ministers and central bank governors ahead of their Baden-Baden meeting that in completing the work under the Shadow Banking Roadmap, “the FSB has not identified new shadow banking risks that currently require additional regulatory action at global level".

“However, given that new forms of shadow banking activities are certain to develop in the future, FSB member authorities must maintain and continue to invest in an effective and ongoing programme of surveillance, data sharing and analysis so as to support judgements on any required regulatory response in the future.”

More regulation news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Trax gains MiFID II ARM licence from UK FCA
29 September 2017 | London | Reporter: Drew Nicol
Reporting solution provider Trax is among the first to be approved by the UK FCA as an approved reporting mechanism (ARM) for transaction reporting services under MiFID II
Shadow banking will not be banned, confirms IMF
26 September 2017 | Helsinki | Reporter: Jenna Lomax
The IMF, along with the FSB and other regulatory bodies, have no desire to shut down the alternative financing industry but that some aspects of the market’s risk features must be managed
AcadiaSoft expands user base for IM compliance
21 September 2017 | Massachusetts | Reporter: Drew Nicol
The second phase of the IM rules went live on 1 September under the regulatory framework of BCBS and IOSCO
FCA takes pragmatic approach to MiFID II deadline
20 September 2017 | London | Reporter: Drew Nicol
The UK’s financial conduct authority has indicated it will accept a soft roll out of the second Markets in Financial Instruments Directive in January
Ten-year T2S saga comes to an end
19 Septemeber 2017 | Brussels | Reporter: Stephanie Palmer
The Target2-Securities pan-European harmonised settlement platform is finally fully operational, as the Spanish and Baltic markets completed their migration yesterday
Margin rules changing collateral industry, says ISDA
19 September 2017 | London | Reporter: Drew Nicol
New margining rules for non-cleared derivatives are significantly changing collateral practices, according to the International Swaps and Derivatives Association
FIA offers EU guidance on third-country CCP supervision
08 September 2017 | Brussels | Reporter: Drew Nicol
The Futures Industry Association has waded into the debate over the European Commission’s proposal for a two-tier system for regulating EU and non-EU CCPs