Shadow Banking


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Shadow Banking

AFME is actively engaging with regulators on the issues surrounding shadow banking.

‘Shadow Banking’ is commonly used to refer to non-bank entities that undertake bank‐like activities, although a term such as ‘parallel banking’ probably provides a more appropriate description of these services because it does not imply that the activities are somehow hidden.

In November 2011, at the Seoul Summit, the G20 Leaders requested that the Financial Stability Board (FSB), in collaboration with other international standard setting bodies, develop recommendations to strengthen oversight and regulation of shadow banking.

The FSB has broadly defined shadow banking as credit intermediation involving entities and activities outside the regular banking system that results in systemic risk or regulatory arbitrage. Since October 2011, the FSB and other international bodies have undertaken work on five shadow banking workstreams identified by the FSB:

  • Workstream 1: Interactions of banks with shadow banking entities (led by the Basel Committee)
  • Workstream 2: Money Market Funds (IOSCO)
  • Workstream 3: Other shadow banking entities (FSB)
  • Workstream 4: Securitisation (IOSCO)
  • Workstream 5: Securities lending and repo (FSB)

The AFME Shadow Banking group has worked closely with the FSB on these initiatives. In addition, the group has coordinated with members and engaged in extensive advocacy with respect to SFTR and the Margin Rules for uncleared derivatives.

Gary Simmons

Managing Director

+44 (0)20 3828 2723