The criteria seek to identify global financial institutions whose disorderly failure could lead to turbulence in capital market operations and economic activities due to their size, complexity or connection with other financial agents. The criteria were released for public consultation on
FSB's proposal is consistent with the "SIFI" framework covering systemically important banks and insurance companies that could cause negative impacts in case of failure.
For asset managers, the scope of the analysis is concentrated at the investment fund level. The proposal discusses alternatives under which the review focuses on the family of funds, the asset manager itself, or a combination of both. The proposal identifies funds with AUM above
Some asset managers could reach this level if all assets under management in
The proposal would allow local funds to use leverage, if properly registered at CVM. However, they usually do not report very high leverage ratios, nor do they reach the gross exposure suggested by the criteria. Should a review of the leverage of Brazilian funds become necessary, the regulator would be able to perform an in-depth analysis as all funds report their positions on a monthly basis.
Due to derivative market regulations in
The level of complexity of investment strategies in
Additional information is available on www.fitchratings.com.
The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
Director, Fund and Asset Managers
Fitch Ratings Brasil Ltda.
Source: Fitch Ratings
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