Featured Product

    FSB Publishes Reports on Implementation of OTC Derivatives Reforms

    November 19, 2018

    BCBS, CPMI, FSB, and IOSCO jointly published final report on incentives to centrally clear over-the-counter (OTC) derivatives. Additionally, FSB published reports on the implementation of OTC derivatives reforms and the removal of legal barriers.

    Report on Incentives to Centrally Clear OTC Derivatives. In addition to the report, BCBS, CPMI, FSB, and IOSCO published an overview of responses to the August 2018 consultation on incentives to clear OTC derivatives; this overview document sets out the main changes that have been made in the report to address the comments received. The report states that central clearing of standardized OTC derivatives is a pillar of the G20 leaders' commitment to reform OTC derivatives markets in response to the global financial crisis. A number of post-crisis reforms are, directly or indirectly, relevant to incentives to centrally clear. This report by the Derivatives Assessment Team evaluates how these reforms interact and how they could affect incentives. The report, one of the first two evaluations under the FSB framework for the post-implementation evaluation of the effects of G20 financial regulatory reforms, confirms the findings of the consultative document. The analysis suggests that, overall, the reforms are achieving their goals of promoting central clearing, especially for the most systemic market participants. This is consistent with the goal of reducing complexity and improving transparency and standardization in the OTC derivatives markets. Beyond the systemic core of the derivatives network of central counterparties (CCPs), dealers/clearing service providers and larger, more active clients, the incentives are less strong.

    Progress Report on Implementation of OTC Derivatives Reforms. The thirteenth progress report on implementation of OTC derivatives reforms notes that good progress continued to be made across the reform agenda of G20 since the 12th progress report and work to assess whether the reforms meet the objectives intended for them continues. The report mentions that 21 out of 24 FSB member jurisdictions have comprehensive trade reporting requirements in force, up by two since the end of June 2017. Eighteen member jurisdictions now have in force comprehensive standards/criteria for determining when standardized OTC derivatives should be centrally cleared while two more jurisdictions adopted mandatory clearing requirements during the reporting period. Sixteen jurisdictions have implemented comprehensive margin requirements for non-centrally cleared derivatives, representing an increase of two jurisdictions. Estimated collateralization rates have risen since the end of 2016. Thirteen jurisdictions have, in force, the comprehensive assessment standards or criteria for determining when products should be platform traded. New determinations entered into force for specific derivatives products to be executed on organized trading platforms in six jurisdictions. Furthermore, the transparency of information about OTC derivatives transactions has increased since the end of 2016.

    Report on Removal of Legal Barriers to Trade Reporting. The report details progress by the FSB member jurisdictions in implementing the 2015 recommendations to remove or address legal barriers to full reporting of OTC derivatives data to trade repositories and to access—by authorities (both domestic non-primary authorities and foreign authorities)—of trade data held in trade repositories. Four of these recommendations included implementation dates in 2018, while the other two did not have specific implementation dates. The progress report finds that all but three of the FSB member jurisdictions have removed or addressed barriers to full trade reporting. Five FSB member jurisdictions allow masking of counterparty identifiers for some transactions. As reported by jurisdictions, the percentage of masked trades is relatively low, typically 5% or under, with several under 1%. In twelve jurisdictions, changes have been made, or are underway, to address or remove barriers to access to trade repository data by foreign authorities and/or non-primary domestic authorities, including legal barriers that have only very recently been removed.

     

    Related Links

    Keywords: International, Banking, Securities, OTC Derivatives, Central Clearing, Regulatory Reforms, Legal Barriers, BCBS, CPMI, FSB, IOSCO

    Related Articles
    News

    FSI Paper Examines Use of Suptech Initiatives by Financial Authorities

    The Financial Stability Institute (FSI) of BIS published a paper that examines the suptech developments by analyzing suptech initiatives of 39 financial authorities globally.

    October 17, 2019 WebPage Regulatory News
    News

    US Agencies Consult on Policy Statement on Allowance for Credit Losses

    US Agencies (FDIC, FED, NCUA, and OCC) are consulting on the policy statement on allowances for credit losses and on the guidance on credit risk review systems.

    October 17, 2019 WebPage Regulatory News
    News

    PRA Consults on Approach to Supervising Liquidity and Funding Risks

    In consultation paper (CP27/19), PRA published a proposal (CP27/19) to update the supervisory statement SS24/15 on the PRA approach to supervising liquidity and funding risk.

    October 17, 2019 WebPage Regulatory News
    News

    FSB Report Examines Implementation and Impact of G20 Financial Reforms

    FSB published fifth annual report on the implementation and effects of the G20 financial regulatory reforms.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Launches Consultation on Comprehensive Pillar 3 Disclosures

    EBA proposed the new comprehensive implementing technical standard (ITS) for public disclosures by financial institutions.

    October 16, 2019 WebPage Regulatory News
    News

    EBA Consults on Revised Technical Standards on Supervisory Reporting

    EBA launched a consultation on the revised implementing technical standards, or ITS, on supervisory reporting.

    October 16, 2019 WebPage Regulatory News
    News

    BoE and FCA Examine Use of Machine Learning in Financial Sector in UK

    BoE and FCA published a report on the results of a joint survey by BoE and FCA in 2019 to better understand the use of machine learning in the financial services sector in UK.

    October 16, 2019 WebPage Regulatory News
    News

    BCBS Report Examines Progress on Adoption of Basel Framework

    BCBS published the seventeenth progress report on adoption of Basel regulatory framework.

    October 16, 2019 WebPage Regulatory News
    News

    APRA Proposes Measures to Strengthen Capital for Bank Depositors

    APRA proposed changes to APS 111, which is the prudential standard on measuring capital adequacy and establishes the criteria for regulatory capital requirements of authorized deposit-taking institutions.

    October 15, 2019 WebPage Regulatory News
    News

    EIOPA Consults on Technical Advice for the 2020 Review of Solvency II

    EIOPA is consulting on an opinion that sets out technical advice for the 2020 review of Solvency II.

    October 15, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3981