Setting an aggregate limit on exposures to shadow banking entities

Institutions should set an aggregate limit to their exposures to shadow banking entities relative to their eligible capital.

When setting an aggregate limit to exposures to shadow banking entities, each institution should take into account:

• a. its business model, risk management framework as outlined in paragraph 14b), and risk appetite as outlined in paragraph 14d);
• b. the size of its current exposures to shadow banking entities relative to its total exposures and relative to its total exposure to regulated financial sector entities;
• c. interconnectedness as outlined in paragraph 14e).