FSB releases final TLAC standard. The Financial Stability Board (FSB) issued the final Total Loss-Absorbing Capacity (TLAC) standard for global systemically important banks (G-SIBs), which establishes the minimum requirement for the instruments and liabilities that a G-SIB should have available in the event of failure to allow for an orderly resolution that minimizes the impact on financial stability and allows for the continuity of critical functions. Under the standard, G-SIBs will be required to meet a minimum TLAC requirement of at least 16 percent of risk-weighted assets by January 1, 2019, and at least 18 percent by January 1, 2022. (11/9/2015) FSB press release.
Basel Committee seeks comment on draft regulatory treatment of TLAC holdings. In conjunction with the FSB’s announcement of the final TLAC standard for G-SIBs, the Basel Committee on Banking Supervision released a quantitative impact study analyzing the TLAC levels and shortfalls at G-SIBs based on the FSB’s consultative version of the TLAC term sheet. The Basel Committee also published a consultative document on TLAC holdings, which proposes the regulatory capital treatment of TLAC instruments. Comments on the consultative document are due on or before February 12, 2016. (11/9/2015) BIS press release.
FSB report on implementation of G20 financial regulatory reforms. The FSB published its first annual report to the G20 regarding the implementation and effects of the G20 financial regulatory reforms. The report notes steady but uneven progress on the implementation of the reforms and finds that the reforms have increased the resiliency of the global banking sector. (11/9/2015) FSB press release.
FSB reports on the decline in correspondent banking. The FSB issued its report to the G20 regarding the work performed by the FSB in assessing the causes of and risks associated with banks’ withdrawal from correspondent banking. The report found that primary cause for the decline in correspondent banking was concerns regarding money laundering and terrorism financing risks in the jurisdictions of counterpart banks. The FSB outlined a four-part action plan to address the issue. (11/6/2015) FSB press release.
IOSCO addresses audit firm transparency reporting. The International Organization of Securities Commissions (IOSCO) published a report entitledTransparency of Firms that Audit Public Companies, which examines audit firm transparency reporting and offers guidance on the characteristics of and best practices for high quality transparency reporting by audit firms. (11/6/2015) IOSCO press release.
FSB Peer Review of Saudi Arabia. The FSB released its Peer Review of Saudi Arabia, which examined the measures taken by the Saudi Arabian Monetary Agency (SAMA) to implement reforms related to the macroprudential policy framework, bank resolution and deposit insurance. (11/5/2015) FSB press release.
Basel Committee seeks comment on proposal to set haircut floors for non-centrally cleared securities financing transactions. The Basel Committee on Banking Supervision published a consultative document that proposes incorporating haircut floors into the capital requirements for non-centrally cleared securities financing transactions. The proposal seeks to create incentives for banks to set their collateral haircuts above the floors rather than hold more capital. Comments are due by January 6, 2016. (11/5/2015) BIS press release.
FSB reports on progress in implementing reforms to the OTC derivatives market. The FSB issued two reports on the implementation of reforms to over-the-counter (OTC) derivatives market. The Thematic Peer Review of OTC Derivatives Trade Reporting evaluates the progress made by FSB member jurisdictions in implementing trade reporting requirements and concludes that additional measures should be taken to ensure regulators can use the data collected by trade repositories effectively. The OTC Derivatives Market Reforms: Tenth Progress Report on Implementation provides an update on important developments in OTC derivatives reforms since the previous report published in July. (11/4/2015) FSB press release.
FSB publishes guidance and proposals related to resolvability of systemic financial institutions. The FSB published two finalized guidance papers and three consultative documents related to promoting the resolvability of all financial institutions that could be systemic in failure. Comments on the three consultative documents are due on or before January 4, 2016. (11/3/2015) FSB press release.
Basel Committee provides G-SIB assessment information. The Basel Committee released additional information regarding the methodology for assessing G-SIBs to accompany the FSB’s publication of the 2015 list of G-SIBs. (11/3/2015) BIS press release.
ISDA 2015 Section 871(m) Protocol. The International Swaps and Derivatives Association (ISDA) initiated the ISDA 2015 Section 871(m) Protocol, which will allow market participants to amend their ISDA Master Agreements to assign the withholding tax to the party taking the long position in equity derivatives transactions that reference US equity securities. (11/2/2015) ISDA press release.
ISDA OTC Derivatives Compliance Calendar. The ISDA released an updated OTC Derivatives Compliance Calendar. (11/2/2015)
FSB report on promoting long-term investment in Asia. The FSB issued a report from the RCG for Asia that considers the efforts made in regional jurisdictions to promote long-term investment in Asia. (10/30/2015) FSB press release.
ISDA examines cross-border fragmentation in global derivatives market.According to an ISDA research note examining the effects of the US swap execution facility rules on global liquidity pools, the global derivatives market remains fragmented along geographic lines, especially in the market for euro interest rate swaps. (10/28/2015) ISDA Research Note.