In its response to the Commission’s consultation on assessing the adequacy of macroprudential policies for NBFI, EFAMA stresses that Europe needs more holistic and rigorous analyses to determine where financial stability risks lie. Unfortunately, even though investment funds have proven resilient in recent years despite frequent market disruptions, the consultation focuses on the asset management industry.

To address concerns about risks in capital markets, EFAMA made several recommendations to the Commission:

• Focus the policy discussion on capital markets rather than the illusive ‘non-bank financial intermediation’ category.
• Develop an accurate analytical framework to identify potential pockets of risk that require further attention.
• Foster EU macroprudential supervisory capabilities, including through better data sharing.
• Introduce targeted capital market reforms by i) developing a consolidated tape, ii) broadening the range of collateral that can be used to settle variation margin calls in centrally cleared markets, and iii) relieving constraints on dealers’ balance sheets during periods of stress.
• Resist introducing macroprudential measures seeking to ensure that markets behave counter-cyclically during periods of stress (e.g., by tinkering with fund liquidity buffers).