On April 18, 2016, the US Financial Stability Oversight Council issued an update on its multi-year review of potential financial stability risks in the asset management industry. This note highlights takeaways from that report, summarizes its key sections and predicts next steps. Here are the highlights:
- FSOC believes alleged liquidity mismatches (particularly for mutual funds), high leverage (particularly for hedge funds) and other industry practices present potential risks to financial stability.
- FSOC believes regulators do not collect sufficient data to understand the scope or nature of these risks.
- FSOC is creating an interagency working group to assess potential risks associated with leveraged hedge funds. The working group must report its findings to FSOC by the fourth quarter of 2016.
View full article, US Financial Stability Oversight Council Focuses on Asset Management Products and Activities
