Shadow Banking

Europe, Shadow Banking

The European Systemic Risk Board (ESRB) has today published the EU Shadow Banking Monitor 2018 which covers data up to end-2017. This is the third issue in an annual series…

FSB finds global shadow banking up 8% to $45.2 trillion in 2017 report

March 5, 2018

The Financial Stability Board (FSB) published the Global Shadow Banking Monitoring Report 2017, which presents the results of the FSB’s seventh annual monitoring exercise to assess global trends and risks…

The Minneapolis Fed wants a 15% Leverage Ratio and a 1.2% tax on secured financing. That’s one way to reduce risk…

January 16, 2018

Basel III, Regulatory, Shadow Banking, US

Federal Reserve Bank of Minneapolis, Leverage Ratio, Minneapolis Fed, Shadow Banking, systemic risk, TBTF, too big to fail, topstory

The Federal Reserve Bank of Minneapolis has released a plan to end Too Big to Fail (TBTF) on a comprehensive basis. The choice is again between strengthening bank balance sheets…

TSE: shadow banking can reduce macro-prudential policy effectiveness

August 12, 2017

Anna Reitman

research, Shadow Banking, Toulouse School of Economics

There seems to be an agreement among both academics and policy makers that limited regulation of non-depository financial institutions, or shadow banks, was one of the major causes of the subprime mortgage…

ECB’s Constâncio: further regulation needed for shadow banking

May 12, 2017

To deal with the risks created by shadow banking activities or market-based finance new statistical definitions and adjusted reporting requirements are needed to include the quasi-money services provided by shadow…

FSB says Shadow Banking was a $34 trillion industry in 2015

May 10, 2017

Financial Stability Board, FSB, Shadow Banking

The Financial Stability Board (FSB) today published the Global Shadow Banking Monitoring Report 2016. The report presents the results of the FSB’s sixth annual monitoring exercise to assess global trends and…

Vox: Mapping the interconnectedness between EU banks and shadow banking entities

April 25, 2017

Europe, Shadow Banking

The Global Crisis highlighted how linkages between banks and shadow banking entities can lead to the amplification of shocks across borders and sectors, prompting policymakers to seek to improve the…

Reuters: China regulates fund outsourcing business in fresh move to curb shadow banking: Sec Times

March 22, 2017

China, Reuters, Securities Times, Shadow Banking

China’s securities regulator has introduced new restrictions for financial institutions seeking to outsource fund management to external fund managers, the official Securities Times reported on Monday, as the government tightens…

Basel Committee: Identification and management of step-in risk – second consultative document

March 16, 2017

Basel Committee, Shadow Banking

The aim of the proposed framework included in the second consultative document Identification and management of step-in risk is to mitigate potential spillover effects from the shadow banking system to banks. This…

San Francisco Fed: The Changing Face of Shadow Banking in China

January 12, 2017

Asia, China, SF Fed, Shadow Banking

The growth of China’s nonbank financial institutions, which engage heavily in shadow banking, has been extraordinary over the past decade. During this period, China’s shadow banking system not only engaged…

Bank of Canada: Monitoring Shadow Banking in Canada: A Hybrid Approach

December 16, 2016

Bank of Canada, Canada, Shadow Banking

Bo Young Chang, Michael Januska, Gitanjali Kumar and André Usche The shadow banking sector in Canada provides an alternative to banks for intermediating credit to the economy. However, it also…

ECB looks at spillover risk between banks, shadow banks and insurance companies in Europe

November 29, 2016

From the ECB’s Financial Stability Review, November 2016 Box 6 Assessing the spillover potential between banks, shadow banks and insurance companies in Europe Financial distress in the non-bank financial sector…

Moody's: China's shadow banking activity expands briskly; credit growth outpaces nominal GDP

November 1, 2016

China, Moody's, Shadow Banking

Hong Kong, October 27, 2016 — Moody’s Investors Service says that overall shadow banking activity in China (Aa3 negative) expanded briskly during H1 2016. “We estimate that China’s shadow banking…

Korea’s Shadow Banking System Soaring: Central Bank

October 6, 2016

Uncategorized

Korea, Shadow Banking

Recent data from the Bank of Korea shows that Korea’s shadow banking system has grown exponentially over the years, increasing potential risks and vulnerability in the Korean market. Shadow banking…

IMF releases latest Global Financial Stability Report

October 6, 2016

The current report finds that short-term risks to global financial stability have abated since April 2016, but that medium-term risks continue to build. Financial institutions in advanced economies face a…

Australian Financial Review: SMSFs are Australia's version of shadow banks: Credit Suisse

September 29, 2016

Australia, Shadow Banking

Self-managed super funds are now a major source of credit to Australian property investors, taking over from banks which are subject to restrictions governing lending to real estate investors. New…

The value of data: Shadow Banking, repo and lending to SMEs (Premium)

September 6, 2016

Big Data, Financial Stability Board, Investments, Money Market Funds, Repo

Financial Stability Board, Repo, Shadow Banking, topstory

Several stories and reports emerged in the last few days that highlight the value of Shadow Banking and securities finance data in the marketplace. While data is always useful, new sources make…

ECB working paper: tax shadow banking

August 30, 2016

When shadows grow longer: shadow banking with endogenous entry Why did the shadow banking sectors in the US and the euro area expand in the decade before the financial crisis…

ESRB publishes first EU Shadow Banking Monitor

August 2, 2016

The European Systemic Risk Board (ESRB) has today published the first “EU Shadow Banking Monitor”, which presents an overview of developments in the European shadow banking system to assess potential…

Fed Governor Tarullo: is repo supply linked to the demand for safe assets? (Premium)

July 19, 2016

Federal Reserve, Repo, Shadow Banking, Systemic Risk

Federal Reserve, Repo, Shadow Banking, Tarullo, topstory

Federal Reserve Governor Daniel Tarullo, never one to shy away from the tough questions, asked some great ones at the start of last week’s Center for American Progress and Americans…

ECB paper: Shadow banking in the euro area: risks and vulnerabilities in the investment fund sector

June 30, 2016

Nicola Doyle, Lieven Hermans, Philippe Molitor and Christian Weistroffer This paper first highlights the structural features of shadow banking in the euro area, focussing on investment funds. It then discusses…

The FSB, shadow banking risks and expanding the regulatory perimeter: will it work? (Premium)

May 26, 2016

Financial Stability Board, Regulatory, Risk Management, Shadow Banking

Financial Stability Board, risk, Shadow Banking, topstory

The Financial Stability Board (FSB) published a new thematic review yesterday of their progress in Shadow Banking regulation. The first “Principle” of the document is to define and update the…

Lending Club probe a big warning to ABS investors (Premium)

May 10, 2016

Derivatives, Shadow Banking, Systemic Risk, Technology

ABS, Lending Club, peer lending, peer to peer, Shadow Banking, topstory

Monday, Lending Club Corp announced that it had parted ways with several top managers as well as founder and CEO Renaud Laplanche. According to published reports, the company is engaged…

Concerns over ABS ratings in peer to peer lending reveal some pretty shadowy banking (Premium)

April 27, 2016

Collateral Management, Derivatives, Securitization, Shadow Banking

ABS, peer lending, peer to peer, Shadow Banking, topstory

We need a new name for non-financial entities that perform the functions of a shadow bank, what are pleasantly referred to as Peer-to-Peer (P2P) lending “clubs”. These clubs are turning around and…

Would ring fencing under Glass Steagall have prevented the 2008 MBS collapse? (Premium)

February 16, 2016

Dodd-Frank, Financial Stability Board, Glass-Steagall, Regulatory, Securities Lending, Shadow Banking

bank regulation, Dodd-Frank, Glass-Steagal, Shadow Banking, topstory

Last month the Washington Post looked into the contention of the Sanders campaign that Glass Steagall would have prevented commercial banks from crossing the line into the shadow banking realm,…

SFT-R compliance and operational readiness (Premium)

January 26, 2016

Europe, Lehman, Market infrastructure, Operations, Re-Hypothecation, Regulatory, Securities Lending, Shadow Banking, Systemic Risk, Trade Repositories

EU, financial regulation, securities finance, SFTR, Shadow Banking, topstory

The EU’s Securities Finance Transactions Regulation (EU Regulation 2015/2365, or SFT-R) is now officially “live”, as of January 12, 2016. We spoke with European market participants over the last couple…

FRB Vice-Chairman Fischer: Financial Stability and Shadow Banks: What We Don’t Know Could Hurt Us

December 3, 2015

Federal Reserve, Shadow Banking

Vice Chairman Stanley Fischer At the “Financial Stability: Policy Analysis and Data Needs” 2015 Financial Stability Conference sponsored by the Federal Reserve Bank of Cleveland and the Office of Financial…

The FT suggests that collateral transformations amount to regulatory arbitrage

December 1, 2015

Basel III, Collateral Management, Regulatory, Securities Lending, Shadow Banking

Collateral Transformations, FT, LCR, Securities Lending, Shadow Banking, topstory

In a strongly worded article, the Financial Times yesterday came out swinging against collateral transformations. This was a surprise attack against a practice that certainly carries some risk, but is…

Regulators, please note: the focus on Shadow Banking regulation must be on the smart allowance of risk (Premium Content)

November 23, 2015

Basel III, Dodd-Frank, Federal Reserve, Financial Stability Board, Regulatory, Repo, Securities Lending, Shadow Banking

Federal Reserve, FSB, securities finance transactions, Shadow Banking, Tarullo, topstory

The topic of shadow banking has been in the press lately, driven by the Financial Stability Board’s recent annual Shadow Banking monitoring update. This update was nothing if not full…

FSB publishes reports on transforming shadow banking into resilient market-based finance

November 12, 2015

The FSB is publishing today: (i) Progress report on Transforming Shadow Banking into Resilient Market-based Finance: This report sets out actions taken to implement the FSB’s two-pronged strategy to address…

ECB: Report on Financial Structures details structural changes in the euro area financial sector

October 30, 2015

29 October 2015 New ECB report covers banks as well as other financial intermediaries Banks, insurance companies and pension funds in largest euro area economies exposed primarily domestically Consolidation and…

Reuters: Central bankers warn against extending bank regulations to shadow banks

September 29, 2015

* Capital buffers for shadow banks could fuel swings – Noyer * Non-banks have largely escaped bank regulatory surge for now * Fed’s Tarullo says regulators should focus on liabilities…

The FSB takes on fund leverage and liquidity

September 29, 2015

Financial Stability Board, Fixed Income, Investments, Liquidity Management, Risk Management, SEC, Securities Lending, Shadow Banking

Financial Stability Board, FSB, fund management, Leverage, Liquidity, Securities Lending, Shadow Banking, topstory

The Financial Stability Board (FSB) issued a press release outlining what they discussed at their Sept. 25th meeting in London. Leverage and liquidity is still on their mind. Securities lending…

China Securities Finance in the middle of Beijing’s plan to prop up market (Premium Content)

July 7, 2015

China, China Securities Finance, China Securities Regulatory Commission, Margin financing, Securities Lending, Shadow Banking, topstory

Asia, Investments, Securities Lending, Shadow Banking

Chinese government authorities have created a multi-tiered plan to support sharply falling stock prices, including providing liquidity to the China Securities Finance Corporation (CSF). This entity provides margin and securities…

Asset managers, sec lending, and shadow banking: regulators continue to try to connect the dots

June 3, 2015

CCP, Regulatory, Repo, SEC, Securities Lending, Shadow Banking, Trade Repositories

Blackrock, FSOC, Securities Lending, Shadow Banking, topstory

An article in the FT “US regulator gets tough on asset managers’ shadow banking” (May 24, 2015) by Chris Flood (sorry behind the pay wall) reminds us that regulators are…

The Bank of England as the international source of last resort liquidity

February 23, 2015

Bank of England, Federal Reserve, Investments, Liquidity Management, Regulatory, Shadow Banking

Bank of England, CCPs, Central Banks, Liquidity, Shadow Banking, Sterling Monetary Framework, topstory, Zoltan Pozsar

Zoltan Pozsar’s recent paper on the macro view of Shadow Banking pointed out an important connection in financial markets – that the Bank of England is now the global backstop…

Zoltan Pozsar takes the macro view of Shadow Banking (Premium Content)

February 19, 2015

Cash management, Investments, Primary Dealers, Repo, Shadow Banking

leverage bond funds, matched book, Repo, Shadow Banking, topstory, unconstrained bond funds, Zoltan Pozsar

One of our favorite thinkers on Shadow Banking, Zoltan Pozsar, has released a new paper on the role of Shadow Banking in financial markets. His previous work focused on the…

We need simple new names for financial market institutions (Premium Content)

January 27, 2015

Credit Exposure, Hedge Funds, Investments, Liquidity Management, Securities Lending, Shadow Banking, Systemic Risk

asset managers, banks, CCPs, credit intermediation, financial intermediation, hedge funds, insurance companies, maturity transformation, Shadow Banking, topstory

We argue for better language to describe various functions in financial markets. There are banks and bank holding companies that offer a wide variety of credit intermediation and agency services.…

Where can new banks come from? Today’s Shadow Banks

January 26, 2015

Federal Reserve, Securities Lending, Shadow Banking

Federal Reserve, financial intermediation, Securities Lending, Shadow Banking, topstory

The Fed has published a staff report on the emergence of new banks that is sure to confound and distress some market participants. In the report, “Hybrid Intermediaries“, author Nicola…

China Shadow Banking Shows Strong Growth

January 15, 2015

China, Shadow Banking

Bloomberg: China’s shadow banking industry staged a comeback in December as equity investors and local governments contributed to a surge in credit, underscoring challenges for a central bank trying to…

FSB releases report on shadow banking — refining metrics and lower risk numbers

November 4, 2014

Financial Stability Board, Shadow Banking, Systemic Risk

Financial Stability Board, Shadow Banking, topstory

On October 30th the FSB released “Global Shadow Banking Monitoring Report 2014”, their annual examination of the world of shadow banking. Shadow banking is described as “non-bank credit intermediate with…

IMF Shadow Banking report promotes regulation to balance risk and economic growth

October 20, 2014

Andrea Vargo

Shadow Banking

IMF, Shadow Banking, topstory

In October 2014, the International Monetary Fund (IMF) published its Global Financial Stability Report (“the Report”) entitled “Risk Taking, Liquidity, and Shadow Banking: Curbing Excess while Promoting Growth”. The report…

IMF: Risk Taking, Liquidity, and Shadow Banking

October 10, 2014

The October 2014 Global Financial Stability Report (GFSR) finds that six years after the start of the crisis, the global economic recovery continues to rely heavily on accommodative monetary policies…

"Financial Stability Monitoring" by the Fed keeps looking for that line between the gold standard of risk management and the desire to let the economy grow

August 11, 2014

Federal Reserve, Securitization, Shadow Banking

Federal Reserve, risk management, Securitization, Shadow Banking

A recently revised staff research report from the Federal Reserve, “Financial Stability Monitoring,” by Tobias Adrian, Daniel Covitz, and Nellie Liang, looks at how risk should be tracked across financial…

Thursday news roundup: defining liquidity, Moody’s, seclending CCPs, non-bank financial credit providers

July 31, 2014

CCP, Credit Exposure, Derivatives, Europe, Liquidity Management, Regulatory, Securities Lending, Shadow Banking

Bank of England, credit ratings, Liquidity, MiFID, Moody's, Securities Lending CCPs, Shadow Banking

Interesting news and articles from the last week that we haven’t gotten a chance to talk about elsewhere, including MiFID and liquidity, a suggestion that Moody’s has preferenced ratings of…

Sheila Blair on RRP: Not a fan

July 30, 2014

Shadow Banking, Zoltan Pozsar

Cash management, Credit Exposure, Federal Reserve, Money Market Funds, Regulatory, Repo, RRP

Sheila Blair, former head of the FDIC and now head of the private, nonpartisan Systemic Risk Council wrote an article in the July 24th Wall Street Journal “The Federal Reserve’s…

Shadow Banking: recent articles and speeches

May 21, 2014

China, IOSCO, Regulatory, Shadow Banking, Trade Repositories, US

Financial Times, IOSCO, Reuters, Shadow Banking, The Economist, US Comptroller of the Currency

We’ve seen several recent news articles and commentary on Shadow Banking, from The Economist’s special report to news on China’s CITIC. Below are the most interesting articles we’ve seen lately.…

“The roots of shadow banking” by Enrico Perotti: placing the blame for market collapse on repo's safe harbor provisions.

February 4, 2014

repo safe harbor, Shadow Banking

CCP, Cleared Interest Rate Swaps, Collateral Management, Derivatives, Lehman, OTC Derivatives Clearing, Repo, Trade Repositories, Uncategorized

An article published in December 2013 by the Centre for Economic Policy Research “The roots of shadow banking” by Enrico Perotti of the University of Amsterdam, ECB and CEPR grabbed…

Things we learned and said at IMN last week (Finadium subscribers only)

February 3, 2014

Collateral Management, Investments, OTC Derivatives Clearing, Regulatory, Securities Lending, Shadow Banking

IMN, Indemnification, OTC derivatives, Shadow Banking