This leads to confusion because, for example, what has been described as an “activities-based” approach to dealing with the potential risks posed by certain asset management activities actually involves regulation of the firms involved in those activities, such as through liquidity and risk management requirements.
I suspect this confusion has arisen because, in the minds of some, “institution-based” regulation has become close to synonymous with banking regulation. Thus those opposed to, say, capital requirements for a particular kind of intermediary will advocate for activities-based regulation. My own sense is that it is useful to distinguish three possible targets of regulation—specific financial institutions, financial business models, and financial transactions.