FSB is extending the implementation timeline, by one year, for the minimum haircut standards for non-centrally cleared securities financing transactions or SFTs. This extension is intended to ease operational burdens on market participants and authorities, thus assisting them to focus on addressing the impact of COVID-19 pandemic. In this context, FSB has updated the report on regulatory framework for haircuts on certain non-centrally cleared securities financing transactions, which was initially published in November 2015.
FSB has updated Annexes 1, 3, and 4 of the report on regulatory framework for haircuts on certain non-centrally cleared securities financing transactions. Annex 1 contains implementation dates for the policy recommendations for shadow banking risks in securities lending and repos. Annex 3 presents timeline for initial implementation of the FSB framework for numerical haircut floors, while Annex 4 presents steps for assessing the need to cover non-bank-to-non-bank transactions. For bank-to-non-bank transactions, the updated implementation date is January 2023 (instead of January 2022). For non-bank-to-non-bank transactions, the updated implementation date is January 2025 (instead of January 2024). In March 2020, the Group of Central Bank Governors and Heads of Supervision decided to defer the implementation of the Basel III framework by one year to January 2023. Since the FSB framework for numerical haircut floors for bank-to-non-bank transactions is expected to be implemented through the Basel III framework in many jurisdictions, this timeline extension is in line with the re-prioritization of the work of FSB in light of the COVID-19 pandemic.
Keywords: International, Banking, Securities, Securities Financing Transactions, Haircuts, Shadow Banking, Market-based Finance, Basel, COVID-19, Implementation Timeline, FSB
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