The Basel Committee proposes bank capital rule to cover interest rate risks.The Basel Committee on Banking Supervision (BCBS) has issued a consultative document on the risk management, capital treatment and supervision of interest rate risk in the banking book (IRRBB). This consultative document expands upon and is intended to ultimately replace the Basel Committee’s 2004 Principles for the management and supervision of interest rate risk. Comments should be submitted by September 11, 2015. (6/8/2015) BCBS press release; Consultative document.
FSB workshop on compensation practices. The Financial Stability Board (FSB) held in London on April 14, 2015, its third workshop on compensation practices to share experiences and lessons on the implementation of the FSB Principles and Standards for Sound Compensation Practices by banks. Comments should be submitted by July 10, 2015. (6/8/2015) Announcement.
The FSB is playing its part in preventing the financial abandonment of the vulnerable. Mark Carney, chairman of FSB, co-authored an article in the Financial Times (6/3/2015) discussing the problems faced by financial institutions acting as correspondent banks in developing economies. Faced with unwittingly aiding in money laundering and potentially facing stiff penalties, many institutions are pulling business out of the relevant regions or line of business altogether. To the extent that this problem is leading to the loss of basic banking services needed to finance investment in some of the most vulnerable areas in the world, Carney concludes, “The Financial Action Task Force and the World Bank are helping countries build better anti-money laundering systems. Assuring correspondent banks that their respondents are keeping undesirable funds out will not be easy, but it is essential that we find the right systems.” (6/2/2015) FSB press release.
IOSCO 2015 annual conference. The Financial Conduct Authority (FCA) is hosting the 41st Annual Conference of the International Organization of Securities Commissions (IOSCO) in London between June 14th and 18th. Martin Wheatley, head of the FCA was quoted in the Financial Times saying global regulators faced “big questions” that needed to be answered before determining whether the world’s largest asset managers should be deemed “systemically important,” an issue set to be one of the key topics on the agenda at the FCA hosted IOSCO Annual Conference. (6/2/2015)
ISDA announces SIMM licensing program. The International Swaps and Derivatives Association, Inc. (ISDA) has announced the launch of a licensing program for ISDA’s proprietary and patent-pending Standard Initial Margin Model (ISDA SIMM). The model, created for non-cleared derivatives, establishes a single model that meets regulatory standards, which all authorized licensees can use to exchange collateral in a manner that is consistent with margin requirement rules. (6/1/2015) ISDA press release.
Sabine Oil & Gas Corporation failure to pay credit event. The ISDA has announced that its Americas Credit Derivatives Determinations Committee resolved that a failure to pay credit event occurred in respect of Sabine Oil & Gas Corporation. (6/1/2015) ISDA press release.
Market responds to FSB/IOSCO NBNI G-SIFIs consultation. The International Capital Market Association (ICMA) has responded to a second FSB/IOSCO consultation on a methodology to identify NBNI G-SIFIs, cautioning against including asset management companies as potentially systemically risky entities alongside investment funds. (5/29/2015) ICMA press release. Bloomberg reported that Vanguard Group Inc. joined Fidelity Management & Research Co calling the proposal deeply flawed and destructive. (5/30/2015) The FSB announced the public responses will be uploaded to their website by Monday, June 15. (6/5/2015)FSB press release.
New members. The International Securities Services Association (ISSA) announced that Credit Suisse AG, Switzerland, has decided to become a Sponsor and Board Member of ISSA with immediate effect. (5/29/2015) ISSA press release.The International Capital Market Association (ICMA) announced that Bank of China Limited, London Branch, London and NBC Global Finance Limited, Dublin had become members. (6/9/2015) ICMA press release.
Eighth meeting of the FSB Regional Consultative Group (RCG) for the Americas. FSB Regional Consultative Group (RCG) for the Americas was hosted recently by the Banco de México. The meeting which updated members on the FSB’s work plan and policy priorities also considered in detail a number of financial regulatory reform areas and their effects on the Americas. These included the draft Total Loss Absorbing Capacity (TLAC) standard, recent work of the Basel Committee on Banking Supervision, and the FSB’s work program concerning market-based finance and asset management activities. (5/28/2015) FSB press release.
FSB publishes thematic review on supervisory frameworks and approaches for SIBs. The FSB published a thematic peer review on supervisory frameworks and approaches to systemically important banks (SIBs). The review, which was conducted in close collaboration with the BCBS, assesses progress towards enhancing supervisory frameworks and approaches for SIBs since the financial crisis, in particular for global systemically important banks (G-SIBs) (5/26/2015).FSB press release.
Regulatory change and monetary policy. The Bank for International Settlements (BIS) through the Committee on the Global Financial System (CGFS) has published “Regulatory change and monetary policy” CGFS Publications No 54. This report assesses the combined impact of key new regulations on monetary policy. It argues that the likely impacts of the new financial regulations on financial institutions and markets should have only limited and manageable effects on monetary policy operations and transmission. (5/26/2015) BIS publication announcement.