Macroprudential tools for open-ended investment funds

Abstract

Over financial stability concerns, supervisors and regulators have turned their attention to non-bank financial institutions and activities because of the importance they have taken on in recent years. Discussions have started globally over whether macroprudential policy should be conducted in the investment fund sector. The most important risks that these institutions may pose to financial stability mainly arise from the liquidity mismatch between their portfolio assets and their redemption terms, or because they are highly leveraged. There are many different macroprudential tools available in this area which vary greatly across jurisdictions. Important international initiatives are currently under way, driven by the International Organization of Securities Commissions and the Financial Stability Board, aimed at promoting and standardising the available toolkit and how it is used. This article describes the existing tools in Spain, detailing their aim and possible actions by the regulator. It also compares the situation in Spain with other European jurisdictions, revealing that data and risk management tools are widely available in Spain.