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Integrated Markets Monitoring

Integrated Markets Monitoring

The rapid evolution of financial markets prompted both the creation of financial conglomerates/groups which supply goods and services to different sectors of the financial markets and which may pose group risks, and high exposures in the case of financial institutions operating on the financial instruments and investments, insurance-reinsurance and private pensions markets.

The financial crisis has revealed how certain risks materialised in the entire financial sector, thus emphasizing the need for additional supervision at a consolidated level, supervision based on a supplementation of the sectoral prudential supervisory requirements, particularly with reference to the interconnections within the financial group/conglomerate and the exposures of the financial institutions operating on the financial instruments and investments, insurance-reinsurance and private pensions markets.

The Integrated Market Monitoring Service intends, by the objectives pursued, to achieve an additional consolidated supervision, both of the financial groups/conglomerates and of the exposures by types of instruments/markets of the financial institutions operating on the financial instruments and investments, insurance-reinsurance and private pensions markets.

Through the actions undertaken, the Integrated Market Monitoring Service complements sectoral supervision in order to meet the challenges in terms of supervision of financial groups/conglomerates structures whose sizes, interconnectivity and complexity make them particularly vulnerable, but also of high exposures by types of instruments/markets which may become a source of systemic risk.

In this context, the new consolidated monitoring framework is important from a systemic standpoint, pursuing an integrated prudential monitoring at the level of the three sectors of the Financial Supervisory Authority. Thus, it emphasizes group risks (contagion risk, management complexity and concentration), on the detection and correction of multiple use of capital, and on monitoring high exposures by types of instruments/markets, from the standpoint of consolidated supervision.