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Britain, rattled by the recent near meltdown of some pension funds, is pressing ahead to tighten oversight of the so-called shadow banking sector, taking the lead ahead of possible co-ordinated international action.
UK regulators could preempt recommendations by the G20's Financial Stability Board (FSB) to require permanently higher liquidity buffers for Liability Driven Investment (LDI) funds - used by UK defined benefit pension schemes - backed by regular stress tests, two sources said.
The Bank of England in September had to buy UK government bonds after the 1.6 trillion pound ($1.85 trillion) LDI sector struggled to come up with extra collateral to cover crashing bond prices.
It once again shone a spotlight on patchily regulated non-bank financial intermediaries such as investment funds, insurers and pension schemes, now totalling over $200 trillion globally.
The BoE last month called for "effective policy outcomes" from the FSB to improve resilience and remediate "structural vulnerabilities" in non-banks...
more at Reuters