Two New Threats To Financial Stability In FSOC Report

The Financial Stability Oversight Council (FSOC) has released its annual report, giving a snapshot of how the US regulators view the state of the economy and systemic risk (SEC chair Mary Jo White, Federal Reserve chair Janet Yellen, and FHFA director Mel Watt among others have to sign off on the document). While the report is generally upbeat about the US economy, it identifies two new emerging threats: changes in financial market structure and the role of central counterparties (CCP).

“It is important to evaluate whether existing rules and standards are sufficiently robust to mitigate the risk that CCPs could transmit credit and liquidity problems among financial institutions and markets during periods of market stress,” says the report.

Changing market...

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