On March 4, 2015, the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) issued a second Consultation (PDF) addressing the potential designation of investment funds and asset managers as global systemically important financial institutions (G-SIFIs).
The Consultation establishes a protocol and step-by-step plan to potentially designate investment funds and asset managers. FSB and IOSCO seek comments on eligibility thresholds for traditional investment funds that will be evaluated for potential G-SIFI status:
-
$30 billion in net asset value (NAV), and balance sheet financial leverage of 3 times NAV, with a size-only backup of $100 billion in net assets under management (AUM).
-
$200 billion in gross AUM, unless there is a demonstration that the fund is not a dominant player in its markets.
Eligibility thresholds for asset managers are proposed to be:
-
$100 billion in balance sheet total assets, or another specific value.
-
$1 trillion in AUM, or another specific value.
Given the precedents that FSB-IOSCO designations may create for U.S. regulatory actions and SIFI designations, parties that may potentially be impacted by FSB-IOSCO actions and related actions by the U.S. Financial Stability Oversight Council should consider commenting. It is important to note that the administrative procedures and statutory authority restrictions that are applicable in the U.S do not apply to the FSB and IOSCO. Comments must be submitted by May 29, 2015.
