No "one-size-fits-all" approach: LMA reacts to FSB report on leverage in Non-Bank Financial Intermediation
09 July 2025The Loan Market Association (LMA) supports today's release of the Financial Stability Board’s (FSB) report on leverage in Non-Bank Financial Intermediation (NBFI).
We support the FSB's acknowledgment of industry feedback on the diverse nature of NBFI activity and the need for targeted action based on identified risks. We further welcome the flexibility built into the FSB's recommendations which provide authorities with the ability to tailor their policy response to their jurisdictional circumstances by selecting, designing and calibrating policy measures, or combinations of measures, that are most appropriate to the financial stability risks from NBFI leverage that they identify, while considering any adverse effects.
The LMA will continue to work with authorities on the next phase of work under the FSB to continue to push for a flexible approach to regulation due to the vast and varied nature of the NBFI market.
As the authoritative voice of the loan markets in EMEA, representing the major NBFIs involved in the loan markets and their associated products, including GPs and LPs, the LMA has been closely following the work of the FSB in this area and stands ready to continue engaging with regulators and other key stakeholders to ensure that regulatory and market frameworks continue to provide for liquidity, transparency and efficiency in the loan markets, whilst supporting financial stability.
"In recent years, we have seen a seismic shift away from bank lending to nonbank financial participants entering the market. It is important that nonbank financial institutions can continue to provide vital liquidity to finance the real economy and we therefore welcome the FSB's focus on a data-driven approach to underpin the approach to leverage in NBFI. It is important to note, as the FSB do, that a "one-size-fits-all" approach is not appropriate, and the LMA therefore stands ready to assist with providing the requisite information for regulators seeking to understand market dynamics and the existing safeguards in the loan markets." Scott McMunn, CEO - LMA
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For any questions, please reachout to Leyla.Ghaffar-Zadeh@lma.eu.com