On November 14, 2014, the Financial Stability Board (“FSB”) published the following documents which were delivered to the G20 Leaders for the Brisbane summit:
- A letter from Mark Carney, Chair of the FSB, summarizing the progress in financial reforms;
- An overview report on progress in implementation of the financial reforms;
- A progress report on measures taken in the shadow banking arena; and
- A report on the FSB's review of the structure of its representation.
According to the FSB, implementation of financial reforms at national level is progressing well. The FSB, and other international policy bodies, will be working to complete work in the following areas in 2015: (i) the application of numerical haircut floors for uncleared securities financing transactions (“SFTs”) to non- bank-to-non-bank transactions; (ii) standards and processes for global securities financing data collection and aggregation, including a timeline for implementation of the data collection (the FSB has recently published proposals on this, see below); (iii) analysis of the potential harmonization of regulatory approaches to re-hypothecation of client assets and the financial stability issues related to collateral re-use; (iv) incorporation of the numerical haircut floors for uncleared SFTs into the Basel III framework; and (v) guidance on the scope of consolidation of prudential regulation. In addition, progress reviews will be conducted on the implementation of the reforms for money market funds (“MMFs”), the recommendations for aligning incentives associated with securizations, including risk retention requirements, and implementation of the shadow banking reforms. The FSB will assess whether further policy recommendations for shadow banking entities may be necessary.
The FSB also published a progress report on reform of resolution regimes and resolution planning for G-SIBs. The report states that there has been continued progress by jurisdictions to adopt the powers required to resolve failing banks, but that only a few jurisdictions have fully implemented the FSB's key attributes of effective resolution regimes for financial institutions. Resolution powers such as bail-in, or mechanisms to give effect to foreign resolution actions have not yet been adopted by most jurisdictions, and the FSB will continue to carry out reviews and monitor the progress of implementation. The priorities identified by the FSB to progress are: (i) finalizing the common international standard on total loss absorbing capacity that G-SIBs are required to have; (ii) achieving the adoption of contractual recognition of temporary stays on early termination and cross-default rights in financial contracts; (iii) developing further guidance to support resolution planning by home and host authorities; and (iv) promoting the full implementation of the FSB’s requirements for resolution regimes and resolution planning beyond the banking sector.
The letter and reports are available at: