FSB reports on Cairns plenary: At its plenary meeting in Cairns on 17 and 18 September, FSB discussed current vulnerabilities in the global financial system, in particular warning against complacency about certain risks. It also looked at its progress in trying to complete its key financial reform work by the end of the year. It updated on:

  • ending too-big-to-fail: it noted key reports, some still in draft, on critical matters such as:
    •  loss-absorbing capacity of global systemically important banks (G-SIBs);
    • recommendations for statutory and contractual cross-border recognition of resolution actions;
    • draft proposals for a basic capital requirement for global systemically important insurers;
    • the results of consultation on assessment methodologies for global systemically important entities that are not banks or insurers; and
    •  a report on cross-border impacts of various domestic reforms;
  • shadow banking: FSB will update its roadmap and report at the Brisbane Summit, and approved various proposals on the application of haircuts and a plan to examine harmonisation of approaches to rehypothecation of client assets;
  • making derivatives markets safer: there has been good progress in this initiative, and the plenary session urged jurisdictions to continue to co-operate and to defer to each other when appropriate on cross-border issues;
  • fx benchmark reform: the meeting approved new recommendations, to be published by the end of the month;
  • auditing, accounting and disclosure: the plenary was pleased at progress of work to update standards for the financial sector; and
  • implementation monitoring: there will be a consolidated report at the Brisbane summit on progress to date, and, thereafter, a consolidated annual report to the G20.

The G20 welcomed the report and said it is important to finalise the remainder of the programme and implement the remaining reforms.

(Source: FSB Reports on Cairns Plenary)

FSB recommends centralised TR data aggregation: FSB has finalised its feasibility study on the aggregation of OTC derivatives trade repository (TR) data. It recommends moving towards a centralised model of aggregation, rather than one of collection and aggregation by individual authorities on a case-by-case basis. TR data aggregation could be centralised either physically (a central database) or logically (a central catalogue to identify which TR holds and can retrieve certain data). Implementing a centralised model would require completing the introduction of global identifiers for entities, transactions and products, harmonising data elements, and addressing legal, regulatory, governance, technological and costs issues. (Source: Feasibility Study on Approaches to Aggregate OTC Derivatives Data)

FSB reports on jurisdictions' ability to defer to each other: FSB has published a report based on a survey of member jurisdictions' ability to defer to each other's OTC derivatives markets regulatory regimes. Most jurisdictions have responded that, rather than making recognition rely on rules being identical, they would focus on outcomes of the foreign regime, compliance with the global Principles for Financial Markets Infrastructures and the signing of a Memorandum of Understanding. (Source: FSB Report)