LONDON, Nov 9 (Reuters) - Regulators should keep on open mind when writing rules for the world's $239 trillion "non-bank" financial sector to avoid one-size fits all approaches, the EU's top securities watchdog said.
Non-banks, a sector which includes hedge funds, real estate funds, insurers and private investments and now account for about half of the world's financial sector, are firmly in the regulatory limelight.
This follows redemption-related stresses among money market funds (MMFs) during a "dash for cash" when economies went into pandemic lockdowns in March 2020, and last year with liability-driven investment (LDI) funds in Britain.
European Securities and Markets Authority (ESMA) chair Verena Ross said regulators are closely examining non-banks' leverage, liquidity and their connectivity with banks.
Meanwhile, the BoE has called for tougher liquidity rules for MMFs, but sterling-denominated funds are listed in European Union countries such as Ireland and Luxembourg, where the rules are written by the 27-member bloc.
Persons:
Verena Ross, Ross, MMFs, BoE, ESMA, Huw Jones, Alexander Smith
Organizations:
European Securities and Markets Authority, Reuters, U.S . Federal, The Bank of England, U.S, Financial, Union, European Commission, Thomson
Locations:
Britain, Ireland, Luxembourg