Part V The Broader View and the Future of MiFID, 22 Shadow Banking and the Functioning of Financial Markets
Edited By: Danny Busch, Guido Ferrarini
- Regulatory liability of lenders — Shadow banking — Securities — Financial stability
This chapter considers the financial activity taking place outside the traditional and often unregulated financial sphere of the securities markets, which has become substantial and diverse, and is often called ‘shadow banking’, a misnomer. These activities, mapped by the Financial Stability Board, include a variety of entities which specialise in certain financial activities, or provide financial services as part of their overall product offer. They create risks of a ‘systemic’ nature, leading to major financial disruption and contagion. Although thought to be on the border of the traditional securities systems, these matters and the related regulation have a considerable impact on the framing of certain classes of securities and may determine the safety of the overall system, including that of the final investor.