The LMA submitted its response to the FSB Consultation on Leverage Risks in NBFIs
27 February 2025Thank you to all our buy-side and sell-side members who contributed their insights to the response. Their feedback has been instrumental in shaping the LMA’s response and ensuring that the collective voice of the market is heard.
Our key points focus on the need to take account of the diversity of:
(i) NBFIs themselves;
(ii) the activities they undertake; and
(iii) the ways in which they use leverage.
A “one size fits all” approach to addressing NBFI leverage risks is unlikely to address the concerns raised by the FSB; indeed, NBFIs who invest in the EMEA loan markets are structured in ways which inherently de-risk threats to more macro financial stability. We have also noted the existence of numerous regulatory requirements in Europe and the UK which already address some of the FSB’s concerns (inc. leverage limits, disclosures and the implementation of risk management procedures). Read our response.
We will continue to engage with regulators and provide updates as needed to enhance the liquidity, efficiency, transparency and sustainability of the loan market. If you have any questions or would like to discuss this further, please do not hesitate to contact us.
Loan Market Association