FSB final report on leverage in NBFI and data challenges work plan

The Financial Stability Board (FSB) has published its final report on leverage in non-bank financial intermediation (NBFI) which highlights the significant role of NBFI leverage in recent financial stress episodes and provides policy recommendations to mitigate associated financial stability risks. The recommendations build on existing implemented policy measures by authorities and the work of standard-setting bodies (SSBs) and relate specifically to identification and monitoring, NBFI leverage in core financial markets, counterparty and credit risk management, addressing incongruencies in regulatory treatment and cross border cooperation.

In particular:

• Identification and monitoring – recommendations 1 to 3 advise authorities to establish a domestic framework identifying and monitoring financial stability risks stemming from NBFI leverage in an effective, timely, frequent and proportionate manner, to evaluate the adequacy of existing public disclosures, and to address data challenges within their domestic risk monitoring frameworks, collaborating, where appropriate, to enhance cross-border risk identification through improved data and information sharing.
• NBFI leverage in core financial markets – recommendations 4 and 5 advise authorities to address financial stability risks from NBFI leverage in core financial markets by applying policy measures that are most appropriate to the identified risks, while also considering potential adverse effects and calibrating responses to minimise unintended consequences.
• Counterparty credit risk management – recommendations 6 and 7 urge authorities to ensure timely implementation of BCBS guidelines for bank leverage providers and, where needed, work with industry to improve existing private disclosure practices between leveraged nonbanks and their counterparties.
• Addressing incongruencies in regulatory treatment – recommendation 8 stresses the importance of authorities identifying and addressing inconsistent regulatory treatments of NBFI leverage that may lead to regulatory arbitrage and heighten financial stability risks.
• Cross border cooperation – recommendation 9 highlights the importance of cross-border cooperation to coordinate crisis or policy responses to NBFI leverage risks, where legally and operationally feasible.

The FSB and SSBs will continue supporting authorities in implementing the recommendations, beginning with supervisory discussions. Later this year, members will consider follow-up work on recommendations 4, 5 and 7.

The FSB has also published its 2025 NBFI Progress Report highlighting the near-completion of the original policy agenda set in response to the March 2020 market turmoil. The FSB will now shift focus towards reviewing vulnerabilities, mitigating data challenges, policy sharing and evaluating reform impacts.

A work plan has also been published at the request of the South African G20 presidency, to address data challenges in NBFI. The workplan outlines the structure and next steps of the Non-bank Data Task Force (NDTF), including a test case report to be published by mid-2026 that will propose solutions to the identified data gaps. Based on the findings, the FSB will assess the need for further work in additional areas. The FSB will also undertake an analytical deep dive into vulnerabilities in private credit markets, which will also explore related data challenges.

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