Shadow banking The shadow banking reforms can be viewed through two lenses: (i) financial market activities, particularly, repos, securities lending and securitization; and (ii) less regulated financial institutions, such as money market funds, finance companies, hedge funds and managed-asset funds.
Because the sector is so heterogeneous, broad regulatory principles, rather than explicit reforms, have been developed that jurisdictions can apply to mitigate systemic risk – namely, to reduce procyclical behaviour and the likelihood of runs.