The global spotlight on Non-Bank Financial Intermediaries (NBFIs)

Non-Bank Financial Intermediaries (NBFIs) from asset managers, private credit providers, insurers now account for nearly half of global financial assets. Operating outside of the traditional banking sector, these firms offer critical financial services and credit without taking deposits. As their influence in global market grows, so does regulatory attention. Policymakers and standard setters are ramping up efforts to understand and manage the systemic risks NBFIs may pose and are trying to balance a drive for growth with concerns about the growing role that NBFIs play in the wider financial system.

In this blog, we explore the Financial Stability Board (FSB’s) latest publications on NBFIs, and what this means for the global regulatory landscape, and outline how firms can engage with the FSB and national regulators.

The FSB signals greater scrutiny over NBFIs

Since the global financial crisis, Archegos collapse in 2021, the UK liability-driven investment (LDI) crisis in 2022 and the March 2020 “dash for cash” episode, regulators have been increasingly concerned about fragilities in the NBFI sector. The 2020 liquidity shock, in particular, highlighted how leverage in NBFIs can amplify stress in core markets.

In response, the FSB has been investigating the role NBFI leverage plays in amplifying financial stability risks. On 9 July 2025, the FSB released a trio of reports on NBFI leverage, progress report on building NBFI resilience and its workplan to address NBFI data gaps challenges. The message is clear: systemic risk is no longer just a banking story, and the regulatory net is widening.

While the FSB has ruled out bank capital rules for NBFIs, it has proposed tools like leverage caps. These caps are controversial, as they do not differentiate between low-risk and speculative leverage. Implementation will be left to member states, so firms should engage early to highlight potential risks.

The FSB is also piloting a data collection exercise targeting leveraged bond exposures, but had flagged private markets, especially private credit, as a significant “blind spot” with potential systemic risks. The lack of comprehensive, high-quality data has been consistently highlighted by the FSB and other regulators as a critical constraint in assessing NBFI related risks. Firms should expect more regulatory scrutiny of private market activities, and the drive for better data will continue.

A moment of change across jurisdictions

In the UK, Nikhil Rathi, CEO of the Financial Conduct Authority (FCA), champions a data-driven, transparency-first approach to regulating NBFIs. Aligning with the Chancellor’s call to “regulate for growth,” the FCA is actively supporting private markets – by encouraging greater retail participation and supporting PISCES (Private Intermittent Securities Exchange). PISCES is a new UK-regulated, intermittent trading platform for investors to buy and sell shares in private companies.

Similarly, Andrew Bailey, Governor of the Bank of England, and now Chair of the FSB has also voiced strong support for enhanced data collection and monitoring of NBFIs. His appointment as Chair of the new FSB’s Non-Bank Data Taskforce signals a step change in international regulatory coordination, with a clear mandate to close NBFI data gaps. Adding to the momentum, the newly launched UK House of Lords Private Markets Inquiry introduces a new layer of parliamentary scrutiny. The inquiry and Bailey’s new appointment as FSB Chair, signals the push for growth in private markets may need to pass the financial stability litmus test.

In the US, tensions are quietly rising between US financial authorities and the FSB over how to approach NBFIs. Both the Securities and Exchange Commission (SEC) and the US Treasury believe that the FSB’s work has become too narrowly focused – perhaps even overly influenced by a traditional, bank-centric view of financial stability. In upcoming discussions with the FSB, we expect the US to push back on several fronts, seeking to dial down the intensity of the FSB’s NBFI work program and advocate for a more balanced and nuanced approach. Even the Federal Reserve, which has in the past been more aligned with the FSB’s cautionary stance, is reportedly adjusting its position.

In line with international efforts, particularly those led by the FSB, the EU aims to develop a holistic macroprudential framework tailored to the specificities of NBFIs. The European Commission has been cautious in fully embracing some of the FSB recommendations; for example, it has yet to implement the 2021 money market fund reform proposals, believing that current EU regulations already address the key risks. Implementation is expected soon, but how closely the EU will align with the FSB’s broader agenda remains to be seen. There is also a perception in the EU that the FSB’s push for work on NBFIs is driven by banks that feel threatened by NBFI’s growing market share. This scepticism doesn’t mean EU regulators reject the policy goals, rather they prefer to pursue them through existing frameworks such as UCITs and AIFMD.

Some APAC jurisdictions are taking an active approach to understanding the implications of growing NBFI activity. Their efforts fall into three broad areas: assessing how private markets can support economic growth, identifying risks and potential vulnerabilities, exploring the role retail investors might play in accessing private markets, and associated risks. Jurisdictions like Hong Kong have engaged across all three fronts, while Australian regulators are intensifying surveillance and seeking feedback on how to strengthen regulation and disclosure in private markets and amongst NBFIs. Japan is enhancing its oversight of NBFIs through closer monitoring of investment funds and asset managers. In Singapore, regulators are broadening the regulatory perimeter to bring more NBFIs under supervision. Other jurisdictions, however, remain largely on the sidelines. So far, discussions around hard regulatory measures have been limite,d but more regulatory engagement is expected as the agenda continues to evolve.

An opportunity to engage to shape proposals

The FSB is influential, setting the global agenda for financial stability and shaping how national regulators and central banks think. Whilst the FSB has no legal authority, its recommendations have weight with members often aligning their domestic rules to reflect FSB’s priorities. Regulators are thinking about how best to reflect FSB’s recommendations.

The US has traditionally been the most vocal at FSB Committee discussions, followed by the EU and its member states, Canada, Japan, the UK, Hong Kong, Singapore, and Australia. With Bank of England Governor Andrew Bailey now chairing the FSB, the UK’s influence in these global debates is likely to grow.

There is a good opportunity for firms to engage directly to share the future direction of travel:

• Flexibility in implementation. The FSB has acknowledged the need for flexibility in how its recommendations are applied, recognising the diversity of financial systems across jurisdictions. While the FSB sets the tone globally, implementation ultimately rests with individual member regulators.
• Regulators and policymakers are listening. Across jurisdictions, authorities are under increasing pressure to support economic growth and competitiveness. In both the UK and EU, this has translated into a clear shift toward more open dialogue with industry, with policymakers seeking strong evidence and insights to ensure that emerging rules are proportionate and well-targeted. In APAC, most regulators remain in the early stages of policy development on NBFIs, creating a valuable window for early engagement.
• Inaction carries risks. Without firm input, there is a real danger that private markets could be misunderstood or overregulated. Firms that engage now, who bring forward evidence, use case studies, and insights can ensure a more balanced and enabling regulatory approach.

How can Flint help?

At Flint, we have deep expertise in financial services regulation and private markets in the UK and internationally. Our team consists of ex-regulators, ex-central bankers and those with firsthand experience engaging with the FSB. We can help you respond to regulatory developments, understand and manage risks, and engage effectively with policymakers.

This blog was written by UK Associate Director, Bhavini Parmar, Flint Senior Advisor David Wright, EU Partner Fiona Wright, APAC Partners Laurence Van der Loo, Matthew Chan, EU Director Tomasz Krawcryk, and CEO, Michael Pedroni, of Flint Global’s US partner agency Highland Global Advisors.

Michael is a former senior US official who has an extensive network in the US government at both official and political levels. He founded Highland Global Advisers in 2024 and currently advises a range of US companies on political strategy and government engagement.