Another important piece of the NBFI work programme is the in-depth study of forms of leverage that are not always apparent in supervisory and regulatory data. For example, derivatives can be used to take leveraged positions that are not easy to see in typical balance sheet measures of leverage, or leverage can be built up in portions of the financial system that are less regulated, such as occurred in the Archegos family office incident.
Some types of open-ended funds have experienced periods of stress, a case in point being the March 2020 market turmoil. We are continuing our policy work to address liquidity mismatch in open-ended funds and promote greater and more consistent use of funds’ liquidity management tools. This includes enhancing our 2017 FSB recommendations (informed by lessons learned from the March 2020 episode). Additional work in this area includes running a pilot programme to improve data on open-ended funds for financial stability monitoring and coordinating with IOSCO on the development of detailed guidance on liquidity management tools.
We will undertake work to enhance market participants’ liquidity preparedness for margin and collateral calls, which were important factors in the March 2020 market turmoil, and to identify data gaps in regulatory reporting.
Finally, in conjunction with IOSCO, we will conduct a peer review of money market mutual fund policy reform measures, to take stock of members’ progress in implementation of reforms designed to make this sector more resilient.
The full 2023 work plan is available at https://www.fsb.org/wp-content/uploads/P200223-1.pdf