FSB published a summary of responses received to consultation on the solvent wind-down of the derivatives and trading book portfolio of a global systemically important bank (G-SIB). After carefully considering the comments and the fact that solvent wind-down of derivatives and trading portfolios capabilities differ across jurisdictions, FSB has decided not to develop further guidance on the solvent wind-down of derivatives and trading portfolios at this stage. FSB will continue to promote solvent wind-down of derivatives and trading portfolios planning as part of overall resolution planning.
The discussion paper sought comments on the possible future guidance, along with the rationale, for solvent wind-down of derivatives and trading portfolios planning. The discussion paper identified the capabilities of firms that are necessary to support solvent wind-down of derivatives and trading portfolios, including the ability to perform the analysis necessary to support the preparation of a wind-down plan along with timely assessment and analysis to be undertaken to support decision-making by management and authorities, as a firm prepares for execution and executes the plan. The consultation was launched in June 2019, with the comment period on the consultation ending on August 02, 2019. Six industry groups commented on the discussion paper, with some of the responses being consolidated efforts and resulting in FSB receiving three comment letters for the publication. Respondents generally opined that further guidance, if any, should be considered in a way that would limit or reduce regulatory divergence, acknowledge differing business models, and be principles-based and capabilities-focused.
Keywords: International, Banking, Resolution Planning, G-SIB, Solvent Wind-Down, Derivatives, Recovery and Resolution, Trading Book, Systemic Risk, Responses to Consultation, FSB
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
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