Featured Product

    FSB Examines Implementation of Resolution Regimes in Financial Sector

    November 14, 2019

    FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions and sets out plans for further work. The report also presents the status of implementation of aspects of bank resolution regimes by FSB jurisdictions, along with the planned actions and timelines going forward. The report reveals that significant progress has been achieved; however, progress is uneven across reform areas and sectors and there is need to be mindful of remaining gaps. The report concludes that authorities and firms need to be mindful of the remaining gaps as they work toward making resolution strategies and plans operational in all sectors.

    This report, which has been prepared by the FSB Resolution Steering Group or ReSG, is the eighth report on the implementation of resolution reforms. It takes stock of progress made by FSB members in implementing reforms and summarizes findings from the monitoring of resolvability across the banking, insurance, and financial market infrastructure sectors. It discusses progress in implementing the resolution policies of FSB for banks, insurers, and central counterparties or CCPs. It also examines the initiatives in monitoring implementation and evaluating the effects of resolution reforms and presents actions and timelines going forward. Annex 1 to the report presents the status of implementation of aspects of bank resolution regimes by FSB jurisdictions, as of September 2019. The status is based on self-reporting by national authorities. The availability of legal frameworks and regimes in jurisdictions does not mean that resolution will necessarily be effective, nor does the absence of such powers necessarily mean that a jurisdiction will not be able to achieve an effective resolution.

    With respect to the banking sector, the report highlights that global systemically important banks have been made more resolvable through the build-up of total loss-absorbing capacity, or TLAC, and other measures. Notwithstanding this progress, challenges remain. Authorities need to determine the appropriate balance between group-internal distribution of Total loss-absorbing capacity and non-pre-positioned resources. Furthermore, access to temporary liquidity in relevant currencies and in adequate amounts when and where needed is critical for firms going through resolution and requires ex ante preparation by firms and authorities. 

    In the insurance sector, over the past year, two jurisdictions (Netherlands and Singapore) have introduced or strengthened powers to resolve insurers. Resolvability monitoring highlighted the challenges stemming from group-internal interconnectedness. Ongoing work on resolution planning focuses on intragroup funding, intragroup reinsurance, centralized cash pooling, intragroup guarantees, and operational interconnections. Additionally, work on resolution funding encompasses temporary sources of funding and interactions with any existing policyholder protection schemes, information-sharing, and communication.

    A policy priority for the FSB is the further strengthening of the resilience and resolvability of central counterparties. The continuing work on financial resources and tools to support orderly resolution will lead to further guidance, on which the FSB will publicly consult during the second quarter of 2020. FSB is developing this guidance in consultation with CPMI and IOSCO. This work draws on the experience of authorities and Crisis Management Groups in assessing the quality and quantity of resources for resolution and on the comments received from stakeholders in response to the public consultation. The future guidance should help authorities and Crisis Management Groups in adopting a structured process for evaluating the adequacy of resources to support resolution on a CCP-specific basis and, if necessary, addressing the need for any additional resources considering a reasonable range of scenarios. It should also assist authorities and Crisis Management Groups in their analysis of the treatment of central counterparty equity. 

     

    Related Links

    Keywords: International, Banking, Insurance, Securities, FMI, CCPs, Resolution Regime, Resolution Framework, Crisis Management, Systemic Risk, SIFI, FSB

    Featured Experts
    Related Articles
    News

    HKMA Announces Repayment Deferment Under Payment Holiday Scheme

    HKMA, together with the Banking Sector Small and Medium-Size Enterprise (SME) Lending Coordination Mechanism, announced a ninety-day repayment deferment for trade facilities under the Pre-approved Principal Payment Holiday Scheme.

    August 05, 2020 WebPage Regulatory News
    News

    ESRB Paper Presents Alternative Approach to EBA Stress Test Proposal

    The Advisory Scientific Committee of ESRB published a response, in the form of an Insights Paper, to the EBA proposals for reforms to the stress testing framework in EU.

    August 05, 2020 WebPage Regulatory News
    News

    MAS Announces Key Initiatives to Support Adoption of SORA

    MAS announced several initiatives to support adoption of the Singapore Overnight Rate Average (SORA), which is administered by MAS.

    August 05, 2020 WebPage Regulatory News
    News

    BoE Updates Template and Definitions for Form ER

    BoE updated the reporting template for Form ER as well as the Form ER definitions, which contain guidance on the methodology to be used in calculating annualized interest rates.

    August 05, 2020 WebPage Regulatory News
    News

    PRA to Extend Temporary High Balance Coverage Amid COVID Crisis

    PRA published the policy statement PS19/20 on the final policy for extending coverage under the Financial Services Compensation Scheme (FSCS) for Temporary High Balance.

    August 04, 2020 WebPage Regulatory News
    News

    EBA Publishes Standards on Disclosure and Reporting of MREL and TLAC

    EBA published the final draft implementing technical standards for disclosures and reporting on the minimum requirements for own funds and eligible liabilities (MREL) and the total loss-absorbing capacity (TLAC) requirements in EU.

    August 03, 2020 WebPage Regulatory News
    News

    EBA Releases Erratum for Phase 2 Package on Reporting Framework 2.10

    EBA published an erratum for the phase 2 of technical package on the reporting framework 2.10.

    August 03, 2020 WebPage Regulatory News
    News

    EC Sets Out Updated Technical Information for Solvency II Calculations

    EC published the Implementing Regulation 2020/1145, which lays down technical information for calculation of technical provisions and basic own funds.

    August 03, 2020 WebPage Regulatory News
    News

    US Agencies Issue Statement on Additional COVID-19 Loan Accommodations

    FFIEC, on behalf of its members that include US Agencies such as CFPB, FDIC, FED, NCUA, and OCC, issued a joint statement that sets out prudent risk management and consumer protection principles for financial institutions to consider while working with borrowers.

    August 03, 2020 WebPage Regulatory News
    News

    PRA Consults on Implementation of Certain Provisions of CRD5

    PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).

    July 31, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5622