FSB Extends Implementation Timeline for Policy Recommendations on SFTs
FSB announced adjustments to the implementation timelines for its recommendations on securities financing transactions (SFTs), specifically those related to the minimum haircut standards for non-centrally cleared SFTs. The implementation timelines for the policy recommendations for the framework of numerical haircut floors will be extended to January 2022 (instead of end of 2018) for bank-to-non-bank transactions and to January 2024 (instead of end of 2019) for non-bank-to-non-bank transactions. The implementation timelines for other recommendations remain unchanged.
As part of the work to enhance the resilience of non-bank financial intermediation, FSB had developed 18 policy recommendations to address financial stability risks that arise from SFTs such as repos and securities lending. These recommendations were published in the August 2013 report titled "Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos" and updated in the November 2015 report titled "Regulatory framework for haircuts on non-centrally cleared securities financing transactions." Although FSB member jurisdictions are making progress in implementing these policy recommendations, the implementation has seen significant delays in some jurisdictions, especially for the recommendations on the minimum haircuts standards for non-centrally cleared SFTs used by banks to provide financing to non-banks. These delays mainly stem from the new date for implementing the minimum haircut standards on bank-to-non-bank SFTs into banking regulation as part of the Basel III framework, which is now January 2022. FSB has, therefore, decided to adjust these implementation timelines for its policy recommendations. FSB will continue to monitor implementation of its policy recommendations for SFTs to address financial stability risks in the SFT markets and to enhance the resilience of non-bank financial intermediation.
Related Links
Keywords: International, Banking, Securities, Securities Financing Transactions, Haircuts, Shadow Banking, Basel III, Financial Stability, FSB, Implementation Timeline, Policy Recommendations, Market Based Finance, FSB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Pierre-Etienne Chabanel
Brings expertise in technology and software solutions around banking regulation, whether deployed on-premises or in the cloud.
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Previous Article
EBA Single Rulebook Q&A: Third Update for July 2019Related Articles
ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA Provides Opinion on Definition of Credit Institution in CRR
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA Consults on Alignment of Daily Liquidity Report for Banks
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED Releases Scenarios for Second Round of Stress Tests on Banks
FED released hypothetical scenarios for a second round of stress tests for banks.
PRA Announces Update on Supervisory Benchmarking Portfolio Exercise
PRA published updates in relation to the 2021 Supervisory Benchmarking Portfolio exercise.
FED Revises and Extends Capital Assessment and Stress Testing Reports
FED adopted a proposal to extend for three years, with revision, the capital assessments and stress testing reports (FR Y-14A/Q/M; OMB No. 7100-0341).
HKMA Updates Policy Module for Non-Centrally Cleared OTC Derivatives
HKMA revised the Supervisory Policy Manual module CR-G-14 on margin and other risk mitigation standards for non-centrally cleared over-the-counter (OTC) derivatives transactions.
EBA Updates List of Validation Rules for Reporting by Banks
EBA issued a revised list of validation rules with respect to the implementing technical standards on supervisory reporting.
EBA Responds to EC Call for Advice to Strengthen AML/CFT Framework
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 Advocates Environmental Risk Analysis for Financial Sector
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.
