Featured Product

    FSB Report Examines Ways to Address Market Fragmentation

    June 04, 2019

    FSB published a report that examines market fragmentation arising from regulatory and supervisory policies and identifies several work areas to address this issue. The report focuses on instances where reducing market fragmentation might have a positive impact on financial stability or might improve market efficiency, without any detrimental effect on financial stability. The report was delivered to G20 Finance Ministers and Central Bank Governors ahead of their meetings in Fukuoka on June 08–09, 2019.

    In response to a proposal by the Japanese G20 Presidency, FSB explored issues around market fragmentation and considered tools to address them, where appropriate. The report looks at some examples of financial activities where supervisory practices and regulatory policies may give rise to market fragmentation. It discusses potential trade-offs that authorities have considered between the benefits of increased cross-border activity and a need to tailor domestic regulatory frameworks to local conditions and mandates. Areas the report examines include the following:

    • Trading and clearing of over-the-counter (OTC) derivatives across borders
    • Banks’ cross-border management of capital and liquidity
    • Sharing of data and other information internationally

    The report lays out approaches and mechanisms that may enhance the effectiveness and efficiency of international cooperation and help to mitigate any negative effects of market fragmentation on financial stability. The report identifies several areas for further work to address market fragmentation and will review the progress on the work in November 2019. The identified work areas are expected to facilitate further analysis and discussion of approaches and mechanisms for more efficient and effective cross-border cooperation among authorities. Such areas for further work include the following:

    • Exploring ways to, where justified, enhance the clarity of deference and recognition processes in derivatives markets
    • Strengthening the understanding of approaches by supervisory and resolution authorities towards pre-positioning of capital and liquidity by international banks
    • Considering ways to enhance supervisory communication and information sharing, including approaches and mechanisms to avoid future fragmentation
    • Considering whether there is evidence of market fragmentation with observed consequences for financial stability as part of the FSB’s ongoing evaluation of the effects of too-big-to-fail reforms


    Related Links

    Keywords: International, Banking, Securities, Market Fragmentation, G20, Financial Stability, Cross-Border Activities, OTC Derivatives, Too Big to Fail, FSB

    Related Articles

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News

    Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks

    At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.

    September 14, 2023 WebPage Regulatory News

    ISSB Standards Shine Spotlight on Comparability of ESG Disclosures

    The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures

    August 22, 2023 WebPage Regulatory News

    EBA Issues Several Regulatory and Reporting Updates for Banks

    The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.

    August 10, 2023 WebPage Regulatory News

    BCBS Proposes to Revise Core Principles for Banking Supervision

    The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.

    August 04, 2023 WebPage Regulatory News

    US Proposes Final Basel Rules, Transition Period to Start in July 2025

    The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.

    August 04, 2023 WebPage Regulatory News

    FSB Report Outlines Next Steps for Climate Risk Roadmap

    The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.

    August 04, 2023 WebPage Regulatory News

    EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise

    The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.

    July 31, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8931