FSB on Responses to Consultation on Wind-Down of Trading Portfolios

The considerations set out in the consultation paper included consideration of firms’ general capabilities to conduct a solvent wind-down of derivative and trading book activities, the capital and liquidity resources needed to manage the wind-down, and the implications of a wind-down on the viability of the rest of the group. These considerations may be relevant for authorities and firms for both recovery and resolution planning. Solvent wind-down means that all claims are paid in full and all obligations are met in connection with the derivatives and trading book portfolio that is wound-down in a timely and measured manner. Solvent wind-down analysis explores options for how the exit from such positions could be managed as part of a recovery or a resolution. The consultation paper drew on the practices that are emerging in some jurisdictions and describes, subject to eventual specific requests by supervisory and/or resolution authorities, capabilities and arrangements that may need to be put in place to ensure a solvent wind-down plan can be effectively executed. The paper highlighted that solvent wind-down work in some jurisdictions is more advanced than in others (for example, in certain jurisdictions, firms have been requested to develop solvent wind-down plans based on guidance prepared by authorities). 

Related Links

• Responses to Consultation
• Discussion Paper (PDF)

Keywords: International, Banking, Resolution Planning, G-SIB, Solvent Wind-Down, Derivatives, Recovery and Resolution, Trading Book, Systemic Risk, Financial Stability, Responses to Consultation, FSB