The draft policy recommendations are the latest step by regulators around the world to curb risks beyond the banking and insurance industries, which received most of authorities' scrutiny in the aftermath of the 2008 financial crisis. As scores of post-crisis rules have taken effect, banks have stepped back from certain markets, such as corporate bond-trading, while asset managers have taken on a greater role.

Assets under management rose to $76 trillion in 2014 from $50 trillion in 2004 and have grown since the crisis, according to the FSB.

The board said in its report that it will seek comments on the proposals until Sept. 21 and intends to complete the recommendations by the end of the year. It will then turn its attention to considering whether an asset-management company itself, or possibly a sovereign-wealth fund, rather than their activities, can be a source of systemic risk.

“We continue to believe that the FSB's process should be driven by historical experience and empirical data, rather than by hypothesis and conjecture,” Paul Schott Stevens, chief executive officer of the Investment Company Institute, a lobbying group for mutual and exchange-traded funds, said in response to the proposal. “In particular, we emphasize again that there is no empirical basis for the FSB to pursue the designation of regulated funds or their managers as global systemically important financial institutions.”

Strident Opposition

The International Organization of Securities Commissions on Wednesday came out with recommendations on improving data collection to help regulators monitor and tackle risks.

Regulators and the asset-management industry have clashed repeatedly in the past few years, with firms such as BlackRock and Fidelity Investments arguing that authorities misunderstand the nature of the asset-management business and have inappropriately compared them to to banks. Banks designated as systemically important face higher capital and other requirements to help them withstand losses in a potential downturn.

The FSB and IOSCO, a group of market regulators, had earlier considered whether to assess investment funds with more than $100 billion in assets to determine whether they're too big to fail. That idea ran into strident opposition from the fund industry, with BlackRock, Fidelity Investments, Vanguard Group Inc. and Pacific Investment Management Co., among others, meeting with regulators and lawmakers and writing letters and reports in a lobbying effort to get them to reconsider.

BlackRock, the world's largest money manager, said in a May 2015 letter to the FSB that asset managers “are not the source of systemic risk,” and that “asset managers are fundamentally different from banks and other financial institutions.”

The industry argued that instead of a list of too-big-to-fail investment firms, regulators should consider ways of bolstering oversight of specific products, practices, or activities. The FSB and IOSCO agreed last year, and decided to wait to finalize the method for assessing systemically important financial firms that aren't banks or insurers.

“The good news is we've been able to shift this discussion from looking at asset managers as systemically important to looking at the activities that asset managers engage in,” Paul Andrews, secretary general of IOSCO, said this month.

The FSB said in its 43-page consultation that although there haven't been recent problems, funds may “amplify market stress” by rushing to sell assets to meet unanticipated or large demands from clients to redeem their investments. In periods of stress, there might be a so-called first-mover advantage for investors to rush to redeem their funds ahead of others, which could then lead to a fire-sale of assets and spread panic in markets.

In the U.S., the Financial Stability Oversight Council, a panel led by the Treasury secretary, said in April that there may be financial stability concerns arising from funds that invest in assets that are difficult to sell in volatile or stressed markets. Meanwhile, the U.S. Securities and Exchange Commission conducted a review of the industry following the collapse in late 2015 of a fund overseen by Third Avenue Capital Management LLC that focused on high-yield and distressed debt.

Illiquid Assets

The SEC has also proposed rules requiring funds to have more cash and assets to sell quickly, while the FSB said on Wednesday that more disclosure to investors about funds' liquidity and explicit or enforceable limits on illiquid assets might be necessary.

The investment industry has rejected concerns about potential fire-sales. The Investment Company Institute has said that large redemptions at individual high-yield bond funds haven't undermined the stability of the financial system and that funds have instead added liquidity during periods of market turmoil.

The largest asset-management companies are also likely to oppose an FSB recommendation for greater scrutiny of their lending of securities to other traders. Financial institutions often pay a fee and provide collateral to a fund company in order to borrow securities for their own trading purposes. Mutual and other retail investment funds accounted for 44 percent of the 14 trillion euros ($15.8 trillion) in securities made available for lending, according to 2015 data cited by the FSB.

Large asset managers sometimes also provide insurance to their own investors through the form of an indemnification against any possible losses from the arrangements if the borrower doesn't return the securities. As new regulations apply to banks, the FSB said asset-managers may play a larger role in the lending market which “could potentially result in a concentration of systemic risks outside the banking sector.”

The FSB said regulators need better data to oversee the lending and should look to also verify or confirm that asset-managers have resources to cover the losses. The industry has previously said regulators' worries are overstated.

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