FSB proposes measures to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls during times of market-wide stress

FSB proposes measures to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls during times of market-wide stress Press enquiries: Press release +41 61 280 8477 press@fsb.org Ref: 8/2024 17 April 2024 FSB proposes measures to enhance the liquidity preparedness of non-bank market participants for margin and collateral calls during times of market-wide st. [...] The report highlights the need for policy adjustments to deal with liquidity strains in the NBFI sector arising from spikes in margin and collateral calls during times of market stress, such as the March 2020 market turmoil, Archegos, and the commodities markets turmoil and stress in liability-driven investment funds in 2022. [...] The recommendations cover liquidity risk management and governance, stress testing and scenario design, and collateral management practices of non-bank market participants, focussing on liquidity risks arising from spikes in margin and collateral calls. [...] It follows up on the findings of a review of margining practices conducted in 2022 by the (BCBS) Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO). [...] The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability.