Washington, D.C., April 7, 2014 - The Institute of International Finance today submitted its response to the Financial Stability Board's proposed assessment methodologies for identifying non-bank non-insurer (NBNI) global systemically important financial institutions.

"How to properly identify and address systemic risk remains international regulators' primary focus," said Tim Adams, president and CEO of IIF. "We appreciate the work the FSB has done in this space, and we reiterate our support of the FSB's focus on activities and not entities."

"Given the potential impact of this work on the financial system, it is vital to ensure a robust and transparent final methodology that truly captures sources of systemic risk," said Kevin Nixon, managing director for regulatory affairs at IIF. "s the FSB moves forward it should not work under the assumption that entities posing a global systemic risk currently exist within the non-bank non-insurer space."

IIF's comments to the FSB focused on three specific areas:

• IIF noted that "˜size' is not the primary, nor should it be used as the dominant, indicator of an NBNI entity's global systemic risk. Existing regulations and the significant counterparty risk-reducing derivatives reforms already in progress should be taken into account when interpreting whether indicators actually pose a systemic risk.
• IIF endorsed the FSB and IOSCO's approach to focus on investment funds and not asset managers. Further, in the case of investment funds, IIF said that leverage is the most important indicator of systemic risk.
• IIF called for a transparent methodology that uses reliable data, objective metrics that are risk-based and risk-sensitive, is consistently applied across jurisdictions, and provides clear incentives for reducing systemic risk.

The Institute of International Finance is the global association for the financial industry, with close to 500 members from 70 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. Within its membership IIF counts leading global banks, insurers, pension funds, asset managers and sovereign wealth funds, as well as leading law firms and consultancies. For more information visit www.iif.com.