Setting aside the SIFI-designation approach previously proposed for asset management, the FSB has now laid out the structural vulnerabilities it believes warrant attention as prudential concerns or systemic activities and practices.  Crafted before Brexit, these structural vulnerabilities are now being tested and the extent to which open-end vehicles remain resilient will have significant bearing on the final shape of FSB action and the timing of its and national regulatory initiatives.  Eschewing many of the more hands-on systemic measures contemplated in the designation consultations, the FSB’s approach to asset management in this consultation addresses a series of data improvements and internal procedures it believes would significantly enhance industry resilience.  Aspects of this framework – e.g., that proposed to address leverage and securities financing – lay groundwork for possible prescriptive rules, but none is here proposed.  The approach to transition AUM under stress is built on prior FSB guidance in this area and will require considerable advance planning and redundancy if national regulators act as the FSB proposes.

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