Response to consultation on Guidelines on limits on exposures to shadow banking

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2. Do you agree with the approach the EBA has proposed for the purposes of establishing effective processes and control mechanisms? If not, please explain why and present possible alternatives.

It is not appropriate to establish processes and control mechanisms before finalising the definition of a shadow banking entity.

The AIC recommends that the EBA finalise the definition of a shadow banking entity with a full impact assessment before agreeing further details.

3. Do you agree with the approach the EBA has proposed for the purposes of establishing appropriate oversight arrangements? If not, please explain why and present possible alternatives.

It is not appropriate to establish oversight arrangements before finalising the definition of a shadow banking entity.

The AIC recommends that the EBA finalise the definition of a shadow banking entity with a full impact assessment before agreeing further details.

4.Do you agree with the approaches the EBA has proposed for the purposes of establishing aggregate and individual limits? If not, please explain why and present possible alternatives.

It is not appropriate to establish the approaches for setting aggregate and individual limits before finalising the definition of a shadow banking entity.

The AIC recommends that the EBA finalise the definition of a shadow banking entity with a full impact assessment before agreeing further details.

5. Do you agree with the fallback approach the EBA has proposed, including the cases in whichit should apply? If not, please explain why and present possible alternatives. Do you think that Option 2 is preferable to Option 1 for the fallback approach? If so, why? In particular: Do you believe that Option 2 provides more incentives to gather information about exposures than Option 1? Do you believe that Option 2 can be more conservative than Option 1? If so, when? Do you see some practical

It is not appropriate to establish a fallback approach to setting exposure limits before finalising the definition of a shadow banking entity.

The AIC recommends that the EBA finalise the definition of a shadow banking entity with a full impact assessment before agreeing further details.

6. Taking into account, in particular, the fact that the 25% limit is consistent with the currentlimit in the large exposures framework, do you agree it is an adequate limit for the fallback approach? If not, why? What would the impact of such a limit be in the case of Option 1? And in the case of Option 2?

It is not appropriate to establish a fallback approach to setting exposure limits before finalising the definition of a shadow banking entity.

The AIC recommends that the EBA finalise the definition of a shadow banking entity with a full impact assessment before agreeing further details.

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Name of organisation

The Association of Investment Companies