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

    PRA Finalizes Supervisory Approach for Non-Systemic Banks in UK

    PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.

    April 15, 2021 WebPage Regulatory News
    News

    EBA Finalizes Standards on Methods of Prudential Consolidation

    EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).

    April 15, 2021 WebPage Regulatory News
    News

    EBA Updates List of Other Systemically Important Institutions in EU

    EBA updated the list of other systemically important institutions (O-SIIs) in EU.

    April 15, 2021 WebPage Regulatory News
    News

    BCBS Report Concludes Basel Risk Categories Can Capture Climate Risks

    BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.

    April 14, 2021 WebPage Regulatory News
    News

    UK Authorities Welcome FSB Review of their Remuneration Regime

    UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.

    April 14, 2021 WebPage Regulatory News
    News

    PRA and FCA Letter on Addressing Risks from Use of Deposit Aggregators

    PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.

    April 14, 2021 WebPage Regulatory News
    News

    MFSA to Amend Banking Act and Rules in Coming Months to Transpose CRD5

    MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.

    April 14, 2021 WebPage Regulatory News
    News

    EC Delegated Regulation on Specialized Lending Exposures Under CRR

    EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.

    April 14, 2021 WebPage Regulatory News
    News

    OSFI Proposes to Enhance Assurance Expectations for Basel Returns

    OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.

    April 13, 2021 WebPage Regulatory News
    News

    ECB Issues Results of Benchmarking Analysis of Recovery Plans of Banks

    ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.

    April 13, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6858