IOSCO Updates Peer Reviews on Regulation of Securitizations and MMFs
IOSCO published two updated reports on peer reviews of the implementation of incentive alignment recommendations for securitization and on the regulation of money market funds or MMFs. The reports describe progress by IOSCO members in FSB jurisdictions in adopting legislation, regulation, and other policies covering securitization and money market funds, both of which are the G20 priority reform areas. The securitization report covers two topics—incentive alignment arrangements and disclosure requirements; the report finds that, overall, progress remains mixed across participating jurisdictions in implementing the recommendations for incentive alignment for securitization.
The securitization report sets out the findings of the 2018 Update Review, where IOSCO members from 24 participating FSB member jurisdictions were asked to provide information on regulatory developments in these areas as of August 30, 2018. Out of the 24 participating jurisdictions, 12 jurisdictions had final adoption measures in force for implementation of incentive alignment regimes (unchanged since 2017) while 10 jurisdictions had final adoption measures in force for disclosure requirements for issuers (unchanged since 2017). However, 5 EU jurisdictions had final adoption measures published but not taken or in force, showing an improvement from 2017. It was found that changes in implementation status were warranted for EU member jurisdictions (France, Italy, the Netherlands, Spain, and the United Kingdom) in both areas. The review also found that reforms were underway in Argentina, Australia, Brazil, China, Indonesia, Russia, and Saudi Arabia; however, these did not warrant a change in implementation status.
The money market funds report sets out the findings of the 2018/2019 Update Review, where IOSCO members from 24 participating FSB member jurisdictions were asked to provide information on the relevant regulatory reforms as of March 31, 2019. The report covers three topics: valuation, liquidity management, and money market funds that offer a stable Net Asset Value. The review finds that most jurisdictions have implemented the fair value approach for the valuation of money market fund portfolios, but progress in liquidity management is less advanced and less even. On money market funds that offer a stable Net Asset Value, further work was needed. In 2019, the implementation status changed for two jurisdictions: Hong Kong and Republic of Korea. In Hong Kong, the final implementation measures came into force in the two remaining reform areas: liquidity management and money market funds that offer a stable Net Asset Value. For the Republic of Korea, draft implementation measures were published in the two remaining reform areas: valuation and liquidity management. Overall, implementation of the reported reform areas is most advanced in 12 participating jurisdictions (approximately 78% of the global market), including three of the largest markets (U.S., China, and Japan).
These reports summarize the ongoing efforts of IOSCO to monitor implementation of reforms for money market funds and securitization, since IOSCO published the first two peer reviews in September 2015. The reports contain updated tables summarizing the implementation status of each participating jurisdiction in areas covered by the Update Reviews. The reports also take note of the new regulations yet to come into force or to be applied in various jurisdictions. The reports set out the background, methodology, and findings that were reported to the G20 leaders in 2018 and 2019 and were included in the Annual Reports on implementation and effects of the G20 financial regulatory reforms.
Related Links
Keywords: International, Banking, Securities, Insurance, Peer Review, Securitization, G20, Money Market Funds, Regulatory Reform, FSB, IOSCO
Related Articles
HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
EBA Guide to Monitor Threshold for Intermediate Parent Undertakings
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
ESMA Group Issues Recommendations on RFR Switch in Interdealer Market
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
ECB Study Assesses Impact of Basel III Finalization Package
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
PRA Updates Remuneration Policy Statement Templates and Tables
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.
