Featured Product

    FSB Consults on Solvent Wind-Down of Trading Portfolios of G-SIBs

    June 03, 2019

    FSB published a discussion paper that sets out considerations related to the solvent wind-down of the derivatives and trading book portfolio of a global systemically important bank (G-SIB). The considerations set out in this discussion paper include consideration of firms’ general capabilities to conduct a 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. Responses to the discussion paper are requested by August 02, 2019.

    The paper discusses the concept of "solvent wind-down" and "wind-down planning," the relevant capabilities of firms, the evaluation or verification of firm capabilities, and coordination among home and host authorities. 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. This discussion paper draws 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 highlights 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). The focus of the discussion paper is on the wind-down of G-SIBs’ derivatives and trading book activities as opposed to other activities or assets (for example, loan portfolios). This focus is important because of the unique complexity and cross-border nature of derivatives and trading book activities and the potential financial stability risks that may stem from a disorderly wind-down of these activities. Hence, a clear strategy for winding down portfolios of financial instruments in an orderly and controlled manner may be needed as part of recovery and resolution plans of G-SIBs, then assessed in the context of supervisory reviews and resolvability assessments. This discussion paper should not be viewed as proposed guidance; rather, the responses to the public consultation will be considered to determine whether the development of guidance would be useful.

     

    Related Links

    Comment Due Date: August 02, 2019

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

    Related Articles
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    News

    FDIC Approves Proposal to Amend Swap Margin Rule

    FDIC approved what would be a joint proposal by the US Agencies (FCA, FDIC, FED, FHFA, and OCC) to amend regulations that require swap dealers and security-based swap dealers under the agencies’ respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared (Swap Margin Rule).

    September 17, 2019 WebPage Regulatory News
    News

    FASB Proposes Taxonomy Changes Related to Topics 848 and 470

    FASB proposed taxonomy improvements for the proposed Accounting Standards Update on topic 848 on facilitation of effects of reference rate reform on financial reporting.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Statement on Recalculating Transitional Measures Under Solvency II

    BoE notified that it will be willing to accept applications from firms to recalculate transitional measure on technical provisions (TMTP) as at September 30, 2019.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Hosts Conference to Discuss Issues from Emergence of Stablecoins

    BIS hosted a conference in Basel to discuss policy and regulatory issues posed by the emergence of stablecoin initiatives backed by financial institutions and large technology companies.

    September 16, 2019 WebPage Regulatory News
    News

    BIS Paper on Embedded Supervision of Blockchain-Based Financial Market

    BIS published a working paper that investigates ways to regulate and supervise blockchain-based financial markets.

    September 16, 2019 WebPage Regulatory News
    News

    BoE Paper on Market-Implied Systemic Risk and Shadow Capital Adequacy

    BoE published a working paper that presents a forward-looking approach to measure systemic solvency risk.

    September 13, 2019 WebPage Regulatory News
    News

    HKMA Consults on Policy Module on Pillar 2 Supervisory Review Process

    HKMA is consulting on the revised Supervisory Policy Manual module CA-G-5 that sets out the HKMA approach to conducting the supervisory review process under Pillar 2.

    September 13, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3830