FSB met on 18 July to discuss progress in regulatory reform and two new consultations. FSB’s main focus is addressing the risks posed by global systemically important financial institutions (G-SIFIs). The papers look at the global systemic importance of banks and how much additional loss absorbency key banks should have, and at what powers supervisors should have to better resolve failing G-SIFIs without systemic disruption or loss to tax payers. The second paper was drafted by the Basel Committee. Key proposals include:

  • stronger and better powers for national regulators and co-operation between regulators;
  • removal of obstacles to orderly resolutions;
  • better planning by firms and authorities;
  • a methodology for assessing the systemic importance of institutions; and
  • the additional loss-absorbency measures global systemically important banks (G-SIBs) should have and the disincentives regulation offers, so banks change their behaviour.

The meeting also discussed:

  • improving oversight and regulation of shadow banking;
  • reforming OTC derivatives markets, including margining requirements for non-centrally cleared contracts;
  • creating a global “legal entity identifier” system;
  • the International Organisation of Securities Commissions' (IOSCO) report on the impact of technological changes on market efficiency and integrity;
  • convergence of accounting standards;
  • financial stability issues in emerging markets, and developing economies;
  • a global framework for monitoring and evaluation of agreed standards; and
  • setting up six regional consultative groups.

Comments are required on the consultations by 26 August to the Basel Committee on the loss-absorbency paper and by 2 September to FSB on the resolution paper. (Source: FSB Holds Update Meeting, FSB Consults on G-SIFIs and Basel Consults on G-SIFIs)