In his written testimony before the Senate Banking Committee on Dodd-Frank implementation, Federal Reserve Board Governor Daniel K. Tarullo outlined the Federal Reserve’s prudential regulatory and supervisory priorities for 2014. As discussed further in this blog post, these priorities include, among other things: (1) finalizing, in the “near term,” Dodd-Frank enhanced prudential standards for large domestic and foreign banking firms; (2) proposing, “fairly soon,” to implement the Basel Committee’s risk-based capital surcharge for global systemically important banks (G-SIBs); (3) finalizing, in the “coming months,” higher Basel III supplementary leverage ratio standards for the 8 U.S.… Read More
Overview of European Commission’s Proposal on Reporting and Transparency of Securities Financing Transactions (SFTs)
Alongside its proposed EU banking sector structural reforms, the European Commission (EC) has issued a proposal regarding the reporting and transparency of securities financing transactions (SFTs). This blog post provides a high-level overview of certain aspects of the EC’s SFT proposal.
EC’s Stated Rationale for the SFT Proposal: The EC stated that “[t]o prevent banks from shifting parts of their activity to the less-regulated shadow banking sector, it is important that any structural separation measure [such as the EC’s proposed banking sector structural reforms] is accompanied by measures improving the transparency of shadow banking.” According to the EC, transparency helps ensure that authorities and market participants have an appropriate understanding of how the markets work and the magnitude and nature of any potential risks. … Read More
Financial Stability Board Proposes Methodologies for Identifying Non-Bank Non-Insurance Global Systemically Important Financial Institutions
Today, the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) proposed a set of assessment methodologies for identifying non-bank non-insurance global systemically important financial institutions (NBNI G-SIFIs). The proposal includes a high-level framework for identifying G-SIFIs and implementation approaches that will apply across all NBNI financial entities. It also includes NBNI financial sector-specific methodologies for (1) finance companies, (2) market intermediaries (e.g., securities broker-dealers), and (3) investment funds.
Complement Existing Methodologies for Identifying G-SIFIs: According to the FSB and IOSCO, the proposed assessment methodologies for identifying NBNI G-SIFIs complement the existing methodologies for identifying global systemically important banks (G-SIBs) and global systemically important insurers (G-SIIs). … Read More
Financial Stability Board Updates List of Global Systemically Important Banks (G-SIBs); Basel Committee Releases Data Relating to Methodology for Identifying G-SIBs
Today, the Financial Stability Board (FSB) published its annual update to the list of global systemically important banks (G-SIBs). The updated list is based on 2012 data and the revised assessment methodology for identifying G-SIBs issued by the Basel Committee in July 2013. Please see below for a blackline of the 2013 list of G-SIBs against the 2012 list.
Data relating to G-SIB Assessment Methodology for Identifying G-SIBs: In its revised assessment methodology for identifying G-SIBs, the Basel Committee announced that it will bring forward by one year to November 2013 the publication of the denominators used to calculate banks’ G-SIB scores, as well as the cut-off score and thresholds used to identify G-SIBs and allocate them to different G-SIB capital surcharge buckets. … Read More
Financial Stability Board’s Proposed Framework for Minimum Haircuts on Securities Financing Transactions
Today, the Financial Stability Board (FSB) published a set of policy recommendations and reports designed to strengthen the oversight and regulation of the shadow banking system. One of the FSB’s reports, entitled Policy Framework for Addressing Shadow Banking Risks in Securities Lending and Repos, sets out recommendations for addressing financial stability risks in this area, including enhanced transparency, regulation of securities financing and improvements to market structure.
FSB’s Proposed Framework for Minimum Haircuts on Securities Financing Transactions: Among other things, the FSB report includes a proposed regulatory framework for haircuts on non-centrally cleared securities financing transactions (SFTs). … Read More
Financial Stability Board Identifies Global Systemically Important Insurers (G-SIIs) and Policy Measures that Will Apply to G-SIIs
Today, the Financial Stability Board (FSB), in consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, identified an initial list of nine global systemically important insurers (G-SIIs). These G-SIIs were identified using the IAIS assessment methodology. Going forward, the list of G-SIIs will be updated each year in November, starting in 2014.
Policy Measures Applicable to G-SIIs: Today, the IAIS also published a set of policy measures that will apply to G-SIIs and are consistent with the policy framework published by the FSB in November 2011. … Read More