Mitigating Systemic Risk in the Financial Markets

Following a yearlong review focused on mitigating systemic risk in the financial markets, this initiative culminated with publication of a report in December 2016.

Unfinished Business: Banking in the Shadows, a report published by the Volcker Alliance in December 2016, was the result of a yearlong review. The study focused on mitigating systemic risk in the financial markets. Areas of concern included heavy reliance by nonbank financial institutions, such as broker-dealers and hedge funds, on short-term funding techniques; liquidity and redemption risk in the asset management industry, which has grown and changed significantly in recent years; the concentration of systemic risk in central counterparty clearing following the passage of central clearing requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and the prevalence of algorithmic and high-frequency trading firms in Treasury and equities markets.