With the summer’s respite over, U.S. regulators are back to business. Last week kicked things off in a big way with the FSOC meeting behind closed doors Thursday to consider systemic regulation of asset managers.  As previously noted (see Client Report SYSTEMIC72), the Council has moved away from trying to designate individual firms as SIFIs, and instead is looking at specific activities and practices in which asset managers engage. FedFin’s new white paper released ahead of the meeting provides an analytical overview of the offerings most likely to be targeted, particularly leveraged and “herded” funds, as well as contributions to sponsored funds. FSOC is also increasingly worried about the ability of asset managers to handle operational risk in a stress scenario (see FSM Report RESOLVE20) and that of CCPs to handle stress without downstreaming it to asset managers who might lack sufficient capital and liquidity to absorb it.  Meanwhile, the banking agencies have made herculean efforts to finalize the LCR, doing so last in concert with a sweeping new NPR on margin rules for uncleared swaps (see Client Report DERIVATIVES27).  If that wasn’t enough, the agencies also finalized a rule defining the denominator for the supplementary leverage ratio (see FSM Report LEVERAGE7). FedFin will shortly provide an in-depth analysis on each of these actions.

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