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ARTICLE · 20 NOVEMBER 2018

IOSCO Proposes Framework To Evaluate Leverage Used By Investment Funds

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In a Consultation Report, IOSCO proposed a framework to evaluate leverage used by investment funds.

United StatesFinance and Banking
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In a Consultation Report, IOSCO proposed a framework to evaluate leverage used by investment funds.

The proposed framework includes a two-step process intended to achieve a "meaningful" and "consistent" analysis of global leverage. In the first step, regulators would perform an analysis of metrics which may exclude from consideration funds unlikely to create "stability risks." In the second step, regulators would perform a risk-based analysis of funds found to create stability risks.

The consultation paper responds to a request from the FSB in its 2017 report, "Policy Recommendations to Address Structural Vulnerabilities from Asset Management." Comments on the proposed framework must be submitted before February 1, 2019.

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