FSB published responses received to the consultation on the solvent wind-down of the derivatives and trading book portfolio of a global systemically important bank (G-SIB). The consultation was launched in June 2019, withe the comment period on the consultation ending on August 02, 2019. FSB published the feedback received from Bank Policy Institute (BPI) and Financial Services Forum (FSF); European Banking Federation (EBF); and Global Financial Markets Association (GFMA), Institute for International Finance (IIF), and International Swaps and Derivatives Association (ISDA).
The considerations set out in the consultation paper included consideration of firms’ general capabilities to conduct a solvent wind-down of derivative and trading book activities, the capital and liquidity resources needed to manage the wind-down, and the implications of a wind-down on the viability of the rest of the group. These considerations may be relevant for authorities and firms for both recovery and resolution planning. Solvent wind-down means that all claims are paid in full and all obligations are met in connection with the derivatives and trading book portfolio that is wound-down in a timely and measured manner. Solvent wind-down analysis explores options for how the exit from such positions could be managed as part of a recovery or a resolution. The consultation paper drew on the practices that are emerging in some jurisdictions and describes, subject to eventual specific requests by supervisory and/or resolution authorities, capabilities and arrangements that may need to be put in place to ensure a solvent wind-down plan can be effectively executed. The paper highlighted that solvent wind-down work in some jurisdictions is more advanced than in others (for example, in certain jurisdictions, firms have been requested to develop solvent wind-down plans based on guidance prepared by authorities).
Keywords: International, Banking, Resolution Planning, G-SIB, Solvent Wind-Down, Derivatives, Recovery and Resolution, Trading Book, Systemic Risk, Financial Stability, Responses to Consultation, FSB
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
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