Global regulators have continued their effort to designate systemically-important financial institutions (G-SIFIs), moving on from final standards on global systemically-important banks (G-SIBs) and insurance companies (G-SIIs) now to a methodology governing non-bank, non-insurance (NBNI) entities. NBNIs include finance companies, market intermediaries (e.g., broker-dealers and investment banks), asset managers and investment funds (including hedge and private-equity funds). The new proposal is more of a “high-level” document and thus considerably less binding than the 2014 consultation,attempting by this less prescriptive approach to recognize different business models and, likely, reduce opposition. However, given the cost of G-SIFI regulation in nations likely to follow global precepts, firms exposed to designation (including those owned by large banks or insurance companies) will nevertheless continue to oppose this approach. Even if they do not throw it off course, final action on the NBNI standards is on a very slow track compared with the G-SIB capital standards now in effect and those for G-SIIs soon to be proposed. As a result, many of the risks cited in this consultation may be addressed by individual nations either for G-SIFIs under their jurisdiction or for G-SIFIs and smaller firms in targeted sectors. Given the general absence of prudential rules for NBNIs, statutory authority for implementing G-SIFI regulation in many nations is uncertain.
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