Featured Product

    FSB Publishes Update on Its Market Fragmentation Work

    October 14, 2019

    FSB published an update on its work to address the issue of market fragmentation. The update covers steps that have been already taken and planned to address this issue by FSB, in collaboration with the standard-setting bodies, since the June 2019 Osaka G20 Summit. The update is focused on areas such as deference between regulators; pre-positioning of capital and liquidity; regulatory and supervisory coordination and information-sharing; and market fragmentation as part of the evaluation of reforms, starting with the ongoing “too-big-to-fail” (TBTF) evaluation of FSB. Among the approaches that FSB is considering to avoid future fragmentation is the possibility to promote greater use of common elements in the reporting of supervisory data.

    The following the key highlights of the update, which was delivered to the G20 Finance Ministers and Central Bank Governors ahead of their meeting in Washington D.C. in mid-October:

    • Deference. IOSCO proposed several practical steps that could strengthen cooperation between regulatory authorities and further assist regulators in addressing the adverse effects of market fragmentation. To bring in considerations relevant to the FSB mandate, these bodies would cooperate with FSB. IOSCO is also developing a repository for deference assessments, which will include, once completed, the deference assessments that have been conducted by member jurisdictions as well as their final outcome.
    • Pre-positioning of capital and liquidity. FSB has taken forward work on this issue through a review of the technical implementation of its total loss-absorbing capacity (TLAC) standard (completed in July 2019) and through a workshop on pre-positioning and ring fencing with external stakeholders. The review concluded that implementation of this standard is still ongoing and, therefore, continued efforts may be needed to avoid potential risks of unnecessary fragmentation of capital resources. To this end, FSB had held a workshop on September 26, 2019 in Philadelphia to engage with industry representatives, academics, and other stakeholders to explore the impact of these requirements on the funding practices, capital structure, and organization of large, internationally active financial institutions and the way they conduct their business.
    • Regulatory and supervisory coordination and information-sharing. FSB will reinforce its role as a forum for the forward-looking discussion of regulatory and supervisory initiatives with cross-border relevance. FSB is also exploring the establishment of a repository that provides information on regulatory initiatives that could have a cross-border relevance; it will discuss the detailed arrangements for such a repository in early 2020. In addition, FSB is considering other approaches to avoid future fragmentation, including the possibility to promote greater use of common elements in the reporting of supervisory data.
    • TBTF evaluation. FSB will examine the broader effects of TBTF reforms (positive or negative) on the financial system, including market fragmentation. The evaluation will explore whether and how resolution reforms (including TLAC) affect G-SIBs’ cross-border presence and management of capital resources for home and host jurisdictions and what the implications may be for financial stability. So far, FSB has conducted stakeholder outreach through workshops to exchange views with relevant stakeholders on this topic and through a call for public feedback. A draft evaluation report will be issued for public consultation in June 2020. The final report will be published in late 2020.

     

    Related Links

    Keywords: International, Banking, Securities, Market Fragmentation, G20, Too Big to Fail, Reporting, IOSCO, FSB

    Featured Experts
    Related Articles
    News

    APRA Updates Timelines for Revision of Market Risk Standards

    The Australian Prudential Regulation Authority (APRA) released an update on the timelines for revisions to the market risk prudential standards and the implications for the broader capital framework.

    October 27, 2021 WebPage Regulatory News
    News

    BCBS and IOSCO Propose Further Policy Work on Margining Practices

    Three global standard-setters launched a joint consultation that reviews the margining practices during the COVID-19 pandemic and identifies potential areas for further policy work.

    October 26, 2021 WebPage Regulatory News
    News

    BoE Seeks Information Before Migrating Statistical Reporting to BEEDS

    The Bank of England (BoE) published the Statistical Notice 2021/09 requiring additional information from firms and software vendors to assist in the onboarding and testing phases for migrating statistical reporting to the BEEDS portal.

    October 25, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Alternative SA for Market Risk

    The European Banking Authority (EBA) published the final draft regulatory technical standards on gross jump-to-default amounts and on residual risk add-on under the Capital Requirements Regulation or CRR.

    October 25, 2021 WebPage Regulatory News
    News

    FCA Publishes Final Rules on Investment Firms Prudential Regime

    The Financial Conduct Authority (FCA) published the final rules on the Investment Firms Prudential Regime (IFPR) to streamline and simplify the prudential requirements for solo-regulated UK firms authorized under the Markets in Financial Instruments Directive (MiFID).

    October 25, 2021 WebPage Regulatory News
    News

    ESAs Propose New Rules for Taxonomy-Related Product Disclosures

    The European Supervisory Authorities (ESAs) have delivered to the European Commission (EC) the final report on the draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR).

    October 25, 2021 WebPage Regulatory News
    News

    EBA Advice on Review of Crisis Management/Deposit Insurance Framework

    The European Banking Authority (EBA) published an advice to the European Commission (EC) on funding in resolution and insolvency as part of the review of the crisis management and deposit insurance (CMDI) framework.

    October 25, 2021 WebPage Regulatory News
    News

    FSOC Report Issues Recommendations to Address Climate Risks

    The Financial Stability Oversight Council (FSOC) released a report in response to the U.S. President's Executive Order on climate-related financial risk.

    October 21, 2021 WebPage Regulatory News
    News

    BIS Paper Mulls Policies to Alleviate Challenges Posed by Big Techs

    The Bank for International Settlements (BIS) published a paper that examines the business models and the associated risks posed by big technology firms foraying into financial services sector.

    October 21, 2021 WebPage Regulatory News
    News

    BIS to Launch Asian Green Bond Fund Early Next Year

    The Bank for International Settlements (BIS) announced the development of an Asian Green Bond Fund, in collaboration with the development financing community, to channel global central bank reserves to green projects in Asia Pacific.

    October 21, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7609