FSB Publishes Reports on Implementation of OTC Derivatives Reforms

By Regulatory News

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 12^th 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

IOSCO Publishes Results of Survey on Commodity Derivatives Markets

FASB Proposes Improvements to the Financial Instruments Standard


News FDIC Consults on Approach to Resolution Planning for IDIs FDIC approved an Advance Notice of Proposed Rulemaking (ANPR) and is seeking comment on ways to tailor and improve its rule requiring certain insured depository institutions (IDIs) to submit resolution plans. April 22, 2019 WebPage Regulatory News
News FDIC Specifies Submission Timeline for FFIEC 031, 041, and 051 Reports FDIC published the financial institution letters (FIL-21-2019 and FIL-22-2019) that offer guidance on submission of Call Reports FFIEC 051, FFIEC 041, and FFIEC 031 for the first quarter of 2019. April 19, 2019 WebPage Regulatory News
News US Agencies Propose to Revise Call Reports FFIEC 031, 041, and 051 US Agencies (FDIC, FED, and OCC) proposed to revise and extend, for three years, the Call Reports FFIEC 031, FFIEC 041, and FFIEC 051. April 19, 2019 WebPage Regulatory News
News US Agencies Propose to Amend Rule on Supplementary Leverage Ratio US Agencies (FDIC, FED, and OCC) are proposing to revise the capital requirements for supplementary leverage ratio, as required by the Economic Growth, Regulatory Relief, and Consumer Protection (EGRRCP) Act. April 18, 2019 WebPage Regulatory News
News EP Resolution on Proposal for Sovereign Bond Backed Securities The European Parliament (EP) published adopted text on the proposal for a regulation of the European Parliament and of the Council on sovereign bond-backed securities (SBBS). April 16, 2019 WebPage Regulatory News
News HKMA Decides to Maintain Countercyclical Capital Buffer at 2.5% HKMA announced that, in accordance with the Banking (Capital) Rules, the countercyclical capital buffer (CCyB) ratio for Hong Kong remains at 2.5%. April 16, 2019 WebPage Regulatory News
News EP Approves Agreement on Package of CRD 5, CRR 2, BRRD 2, and SRMR 2 The European Parliament (EP) approved the final agreement on a package of reforms proposed by EC to strengthen the resilience and resolvability of European banks. April 16, 2019 WebPage Regulatory News
News PRA Finalizes Policy on Approach to Managing Climate Change Risks PRA published the policy statement PS11/19, which contains final supervisory statement (SS3/19) on enhancing banks’ and insurers’ approaches to managing the financial risks from climate change (Appendix). April 15, 2019 WebPage Regulatory News
News PRA Seeks Input and Issues Specifications for Insurance Stress Tests PRA announced that it will conduct an insurance stress test for the largest regulated life and general insurers from July to September 2019. April 15, 2019 WebPage Regulatory News
News EBA Single Rulebook Q&A: First Update for April 2019 EBA published answers to nine questions under the Single Rulebook question and answer (Q&A) updates for this week. April 12, 2019 WebPage Regulatory News

RESULTS 1 - 10 OF 2944

By Regulatory News

Previous Article

Next Article