States govern financial markets through multilateral rules and organizations that are frequently described as being informal in nature. But while such institutions have grown, many have undergone processes of formalization that alter their organizational and legal bases. This, I argue, upends conventional thinking about global financial governance, and informal governance more generally. In this article, I unpack these developments by conceptualizing four dynamics: entanglement, nesting, integration, and conversion. I then present a theory that explains these outcomes by observing: a) the nature of the problem a body aims to address; b) the institutional preferences of members; and c) the organizational environments they operate within. Shifting problems explain the timing of changes, member preferences shape the formalization pathways institutions follow, and the final outcomes we observe are influenced by the presence of formal IOs that can extend key capabilities to informal bodies. Support for this theory is provided through an analysis of aggregate governance patterns in finance and within-case analyses of four instances where formalization has occurred. Overall, the paper advances a new way of thinking about informal governance, new data on formalization of process, and a novel theory of institutional change.