The G20's financial regulatory reform programme, underway since 2008, was designed as an integrated set of strengthened regulatory measures to make the global financial system more robust and less crisis‐prone. However, in practice the G20's stricter regulation of internationally active banks has not been matched by firmer oversight of other financial system participants that also take on large risks. The present article addresses the implications of this situation. Section 1 outlines the role of the banking sector within the broader market‐based financial system. Section 2 considers the dynamics of a crisis in such a system. The measures that the G20 has agreed thus far to strengthen the G‐SIBs, and regulators’ intentions with regard to strengthening other sectors of the financial system are summarized in Section 3. Section 4 describes how stricter bank regulation may affect the resilience of market‐based financial systems in conditions of stress. Section 5 discusses how the focus on strengthening bank regulation, combined with slow progress in extending regulation to other sectors, has accelerated structural change in the financial system and offers some conjectures on how this may alter financial risks, the way the financial system may respond to stress, and the implications for macroprudential regulation.