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.
Previous ArticleFSB Not Planning Further Guidance on Resolution Planning Disclosures
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA published its response to the call for advice of EC on ways to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT).
NGFS published a paper on the overview of environmental risk analysis by financial institutions and an occasional paper on the case studies on environmental risk analysis methodologies.
MAS published the guidelines on individual accountability and conduct at financial institutions.
APRA published final versions of the prudential standard APS 220 on credit quality and the reporting standard ARS 923.2 on repayment deferrals.
SRB published two articles, with one article discussing the framework in place to safeguard financial stability amid crisis and the other article outlining the path to a harmonized and predictable liquidation regime.
FSB hosted a virtual workshop as part of the consultation process for its evaluation of the too-big-to-fail reforms.
ECB updated the list of supervised entities in EU, with the number of significant supervised entities being 115.
OSFI published the key findings of a study on third-party risk management.
FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs.