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FSB to Take Activities-Based Approach

At a recent British Treasury Select Committee hearing, Chair of the Financial Stability Board (FSB) Mark Carney indicated that the organization would change course on its view of the asset management industry. Carney said that the FSB “will address issues around activities first and then take an assessment if there’s any residual risk that merits any action.” While the possibility of designating individual entities is still on the table, it “is on a much slower track” than the focus on activities.

The FSB had originally planned to focus on a designation model and released a consultative paper in March this year suggesting revised methodologies for identifying non-bank non-insurer global systemically important financial institutions. Many commenters (including the Forum) urged restraint and recommended an activities-based approach. The FSB’s change of course aligns it with the International Organization of Securities Commissions (IOSCO) and the FSOC, both of which have shown an interest in an activities-based approach.