U.S. Regulators Rethink Non-bank Entities to Designate Who is Systemic

Investment Executive | James Langton | Apr 25, 2023

According to Fitch credit rating agency, Hedge funds, asset managers and even crypto firms face increased oversight

• Rating agency highlights FSOC’s recent proposals aimed at bolstering market resilience through expanded regulatory oversight. Non-bank entities, including broker-dealers, insurers, and infrastructure firms, may be designated as systemically important, leading to increased capital requirements and compliance costs.
• These changes could reshape firms’ product offerings, business lines, and market competition.
• Large, leveraged hedge funds may face additional scrutiny due to their potential systemic risks.
• The debate around investment managers’ systemic implications may resurface, while the crypto sector could be subject to further regulatory examination after recent bankruptcies and market stress.

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Report said:

Certain large and leveraged hedge funds could attract greater regulatory scrutiny given their potential to pose broader systemic risk in times of market stress

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