19 August 2019 | PDF full text (547 KB)
This report provides the FSB’s audited financial statements for the financial year April 2018 to March 2019. The report also details the FSB’s governance structure.
The FSB will publish its annual report on the implementation and effects of the financial reforms in October.
On 3 June 2019, the FSB published a consultation document on proposed Solvent Wind-down of Derivatives and Trading Portfolios. Interested parties were invited to provide written comments by 2 August 2019. The public comments received are available below.
The FSB thanks those who took the time and effort to express their views. The FSB expects to publish a summary of findings and set out possible next steps in late 2019.
On 3 June 2019, the FSB published a consultation document on proposed Public Disclosure of Resolution Planning and Resolvability. Interested parties were invited to provide written comments by 2 August 2019. The public comments received are available below.
The FSB thanks those who took the time and effort to express their views. The FSB expects to publish a summary of findings and set out possible next steps in late 2019.
19 July 2019
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Ref no: 29/2019
The Financial Stability Board (FSB) today announced adjustments to the implementation timelines for its recommendations on securities financing transactions (SFTs), specifically those related to minimum haircut standards for non-centrally cleared SFTs.
SFTs such as securities lending and repurchase agreements (repos) play a crucial role in supporting price discovery and secondary market liquidity for a wide variety of securities. However, such transactions can also be used to take on leverage as well as maturity and liquidity mismatched exposures, and therefore can pose risks to financial stability.
As part of its work to enhance the resilience of non-bank financial intermediation, the FSB developed 18 policy recommendations to address financial stability risks that arise from SFTs such as repos and securities lending. These recommendations are published in the August 2013 report Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos and updated in the November 2015 report Regulatory framework for haircuts on non-centrally cleared securities financing transactions.
Although FSB member jurisdictions are making progress in implementing these policy recommendations, their implementation has seen significant delays in some jurisdictions, especially for the recommendations related to minimum haircuts standards for non-centrally cleared SFTs used by banks to provide financing to non-banks. These delays stem mainly from the new date for implementing the minimum haircut standards on bank-to-non-bank SFTs into banking regulation as part of the Basel III framework, which is now January 2022.
The FSB has therefore decided to adjust the implementation timelines for its recommendations related to minimum haircuts standards for non-centrally cleared SFTs, including those related to quantitative standards, i.e. the framework of numerical haircut floors (Recommendations 14-18: see updated Annexes 1, 3 and 4 of the November 2015 reportfor details). For example, the implementation timelines for the policy recommendations related to the framework of numerical haircut floors will be extended to January 2022 (instead of end-2018) for bank-to-non-bank transactions and to January 2024 (instead of end-2019) for non-bank-to-non-bank transactions. The implementation timelines for other recommendations remain unchanged.
Going forward, the FSB will continue to monitor implementation of its policy recommendations for SFTs so as to both address financial stability risks in the SFT markets as well as enhance the resilience of non-bank financial intermediation.
To address financial stability risks from SFTs, the FSB developed 18 policy recommendations published in August 2013 and updated in October 2015. These recommendations cover:
The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.
The FSB is chaired by Randal K. Quarles, Vice Chairman for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.
11 July 2019 | PDF full text (282 KB)
The FSB is developing a toolkit of effective practices relating to a financial institution’s response to, and recovery from, a cyber incident. The toolkit aims to provide financial institutions and authorities with a set of effective practices and will be based on the shared experience and diversity of perspectives gathered by the FSB, including through responses to its survey of industry practices.
This survey is a key element of the FSB’s outreach strategy with external stakeholders to gather views on effective practices relating to financial institutions’ response to, and recovery from, a cyber incident. The development of the toolkit will also be informed by a review of publicly available documents on how firms have responded to and recovered from past cyber incidents and a stocktake of relevant publicly released guidance issued by national authorities and international organisations.
The survey closes on Wednesday, 28 August.
5 July 2019
2 July 2019 | PDF full text (1 MB)
This report sets out a technical review of the implementation of the Total Loss-Absorbing Capacity (TLAC) Standard.
The TLAC Standard, published in 2015, was designed so that failing global systemically important banks (G-SIBs) will have sufficient loss-absorbing and recapitalisation capacity for authorities to implement an orderly resolution. Being able to implement orderly resolution minimises impacts on financial stability, maintains the continuity of critical functions, and avoids exposing public funds to loss.
The review concludes that progress has been steady and significant in both the setting of external TLAC requirements by authorities and the issuance of external TLAC by G-SIBs. This has been instrumental in enhancing the resolvability of G-SIBs, strengthening cooperation between home and host authorities and boosting market confidence in authorities’ capabilities to address too-big-to-fail risks.
The FSB sees no need to modify the TLAC Standard at this time. However as implementation is ongoing, further efforts are needed to implement the TLAC Standard fully and effectively and to determine the appropriate group-internal distribution of TLAC resources across home and host jurisdictions.
All G-SIB home jurisdictions in the scope of the review and Hong Kong have adopted TLAC Standard-consistent eligibility criteria and exclusions, including a requirement that TLAC be subordinated to operational liabilities. While the TLAC Standard contains an expectation of a debt component, most jurisdictions do not have a firm requirement. Most jurisdictions allow for TLAC-eligible instruments to be issued under third-country law, but insist on the inclusion of contractual recognition clauses and assurances that a bail-in of those instruments is enforceable.
All G-SIBs within the scope of the FSB January 2019 compliance date meet or exceed the TLAC ratios of at least 16% of risk-weighted assets and 6% of the Basel III leverage ratio denominator based on estimates from publicly available data. Estimates of G-SIB issuances of TLAC range between USD 350 and 400bn per year for the past three years. G-SIBs appear to have planned and managed their issuances to take account of market conditions. As of 2018, most TLAC has been issued in USD (about 67%) and EUR (about 19%).
The review was informed by surveys of the home and host authorities of G-SIBs, responses to a call for public feedback and discussions with stakeholders at a roundtable organised by the FSB in September 2018.
The FSB will continue to monitor implementation of the TLAC Standard and issuance of TLAC instruments and report at least annually on progress. To support the effective implementation of the TLAC Standard it will take stock of the range of practices of authorities and Crisis Management Groups in implementing the TLAC Standard, particularly with respect to internal TLAC pre-positioning, the management of non-pre-positioned TLAC and authorities’ approaches as regards the review of the TLAC-eligibility of instruments and their subordination.
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Ref no: 28/2019
The Financial Stability Board (FSB) today published a technical review of the implementation of the Total Loss-Absorbing Capacity (TLAC) Standard for Global Systemically Important Banks (G-SIBs) in resolution. When fully implemented, the TLAC Standard will promote financial stability by providing confidence that G-SIBs have appropriate capacity to absorb losses and, if necessary, to achieve an orderly resolution and to maintain the continuity of critical functions.
The review concludes that progress has been steady and significant in both the setting of external TLAC requirements by authorities and the issuance of TLAC by G-SIBs. All relevant G-SIBs meet or exceed the TLAC target ratios of at least 16% of risk-weighted assets and 6% of the Basel III leverage ratio denominator. Estimates of G-SIB issuances of TLAC range between USD 350 and 400bn per year for the past three years, in a variety of market conditions. As of 2018, most TLAC had been issued in USD (about 67%) and EUR (about 19%).
The FSB sees no need to modify the TLAC Standard at this time. However, as implementation is ongoing, further efforts are needed to implement the TLAC Standard fully and effectively and to determine the appropriate group-internal distribution of TLAC resources across home and host jurisdictions.
Mark Branson, Chair of the FSB Resolution Steering Group and CEO of the Swiss Financial Market Supervisory Authority FINMA, said: “The successful build-up of loss-absorbing capacity has enhanced the resolvability of G-SIBs and strengthened market belief that too-big-to-fail risks have been reduced. However, the job is not complete. Important challenges remain, particularly in ensuring that, in a crisis, TLAC will be available in the right amounts at all locations within a group.”
The FSB will continue to monitor implementation of the TLAC Standard and issuance of TLAC instruments and report at least annually on progress. To support the effective implementation of the TLAC Standard it will take stock of the range of practices of authorities and Crisis Management Groups in implementing the TLAC Standard, particularly with respect to internal TLAC pre-positioning, the management of non-pre-positioned TLAC and authorities’ approaches as regards the review of the TLAC-eligibility of instruments and their subordination.
When the FSB adopted the TLAC standard in 2015, it made a commitment to examine in 2019 whether implementation is proceeding in a manner consistent with the agreed timelines and objectives as set out in the TLAC Standard; and to identify any technical issues or operational challenges that authorities or firms encounter in the implementation of the standard. The review was informed by surveys of the home and host authorities of G-SIBs, responses to a call for public feedback and discussions with stakeholders at a roundtable organised by the FSB in September 2018.
The FSB is currently publicly consulting on how general and firm-specific disclosures on resolution planning and resolvability could be further enhanced, focusing mainly on disclosures of resolution planning for G-SIBs.
In June the FSB published a report on market fragmentation which included an examination of banks’ cross-border management of capital and liquidity. In response to this report the FSB noted that it will focus on facilitating further analysis and discussion of approaches and mechanisms for more efficient and effective cross-border cooperation amongst authorities. Further work will include strengthening the understanding of approaches by supervisory and resolution authorities towards pre-positioning of capital and liquidity by international banks. In May the FSB also launched an evaluation of the effects of the too-big-to-fail reforms for banks that were agreed by the G20 in the aftermath of the global financial crisis. The FSB will issue a public consultation on this evaluation in June 2020 and will publish the final report in late 2020.
The FSB Resolution Steering Group leads the FSB’s work on resolution regimes, resolution planning, and resolvability assessments for all sectors and developed the Key Attributes of Effective Resolution Regimes for Financial Institutions.
The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.
The FSB is chaired by Randal K. Quarles, Vice Chairman for Supervision, US Federal Reserve; its Vice Chair is Klaas Knot, President, De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.
The OECD Recommendation on Consumer Protection in the field of Consumer Credit was updated in July 2019 following a consultative and iterative process of review. Access to affordable consumer credit is a vital part of a modern and inclusive financial system, and enables consumers to achieve many of their goals and objectives. At the same time, it is important that consumer credit is provided fairly and responsibly as far as possible to help avoid over-indebtedness, financial exclusion and related problems, which are detrimental for both consumers and businesses.
The Recommendation sets out a comprehensive set of measures for the effective regulation and supervision of consumer credit transactions in order to promote fair outcomes for consumers and businesses alike. Following the High-Level Principles on Financial Consumer Protection it sets out measures relating to the role of oversight bodies and recommended disclosure requirements relating to the sale of consumer credit products. In addition, it includes recommended measures relating to fair treatment of consumers to help avoid over-indebtedness and responsible business conduct including responsible lending requirements, provisions relating to credit scoring, product features, debt collection and treatment of vulnerable consumers. It also sets out recommended measures relating to protection of consumer data and access to complaints handling mechanisms.
The Recommendation is open to adherence by OECD Members and non-Members. While not legally binding, practice accords it great moral force as representing the political will of OECD Members and non-Members having adhered to it (Adherents), on whom there is an expectation to do their utmost to fully implement it.
27 June 2019
On 23 May 2019, the FSB published a summary Terms of Reference and a call for public feedback on its evaluation of too-big-to-fail reforms. Interested parties were invited to provide written responses by 21 June 2019. These responses are available below. The feedback will be considered by the FSB as it prepares the draft report, which will be issued for public consultation in June 2020. The final report will be published in late 2020.
The FSB thanks those who have taken the time and effort to express their views.