On August 18, 2016, the FSB published a final guidance paper on arrangements to support operational continuity in resolution, guiding principles on temporary funding needed to support orderly resolution of G-SIBs, and its fifth report to the G20 on progress in resolution. The purpose of the guiding principles is to address the risk of banks having insufficient liquidity to maintain critical operations during a resolution. The aim of the final guidance is to assist supervisory and resolution authorities and firms to evaluate whether firms that are subject to resolution planning requirements have appropriate arrangements to support operational continuity should they enter resolution. The final guidance complements the FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions, which provide a policy framework for the resolution of systemically important firms. Operational continuity relates to the ability to continue critical shared services that are necessary to maintain the provision, or facilitate the orderly wind down, of a firm’s critical function in resolution. The guidance identifies a number of arrangements including specific contractual provisions, access arrangements and governance structures to support operational continuity in resolution for three service models: (i) service provision within a regulated entity; (ii) service provision by an intra-group service company; and (iii) service provision by a third party service provider. The report to the G20 outlines the progress of the FSB’s ongoing work on resolution and implementation of the FSB’s Key Attributes of effective resolution regimes for financial institutions and ensuring that all global systemically important financial institutions are resolvable. The report concludes that while development of policies to address the risks posed by the too-big-to-fail banks is largely complete, more work is still necessary to implement those policies.
The guidance temporary funding is available at: http://www.fsb.org/wp-content/uploads/Guiding-principles-on-the-temporaryfunding-needed-to-support-the-orderly-resolution-of-a-global-systemically-important-bank-%E2%80%9CGSIB%E2%80%9D.pdf, the guidance on arrangement to support operational continuity is available at: http://www.fsb.org/wpcontent/uploads/Guidance-on-Arrangements-to-Support-Operational-Continuity-in-Resolution1.pdf and the G20 report is available at: http://www.fsb.org/wp-content/uploads/Resilience-through-resolvability-%E2%80%93-moving-from-policy-designto-implementation.pdf.