A December consultation report by the Financial Stability Board (FSB) made recommendations to address financial stability risks from leverage in non-bank financial intermediation (NBFI) that could have a direct impact on the securities finance industry. The FSB is concerned about significant growth in NBFI, and risks arising from interconnectedness, opacity and contagion. The recommendations cover non-bank financial firms 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.
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