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Global regulators are set to sharpen their scrutiny of hedge funds, clearing houses and pension assets this year after a run of crises has shifted watchdogs’ focus towards risks outside the banking system.
The disparate group, loosely defined as “non-bank financial institutions” by regulators, has been thrust into the spotlight after a series of market ructions over the past two years.
“It’s different now,” Andrew Bailey, governor of the Bank of England, told reporters in mid-December as he spoke of the “urgent” need to escalate global policymakers’ long-running studies and recommendations on non-bank financials into swift global action. The first seeds for regulators’ NBFI awakening were sown in March 2020 when hedge funds were sucked into a dash for cash by Covid-panicked markets. Two years later, the London Metal Exchange had to temporarily close its nickel market because a squeeze threatened its clearing house...
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