By Terry Flanagan

FSB Prepares for Antalya Summit

The Financial Stability Board has mapped out an outline of its first annual consolidated report on the implementation of the regulatory reforms and their effects, to be delivered to the Antalya G20 Summit in November.

The annual report will help underline those areas where the support of ministers is required to maximize the benefit from previously endorsed policy actions, according to FSB chairman Mark Carney.

The report will highlight progress, good practice and shortcomings and evaluate where there are either inconsistencies in implementation or unintended consequences that need to be addressed. “Over time, these annual reports will enable the G20 to assess whether its reforms are achieving their intended results in an effective and efficient manner,” said Carney in a letter to G20 finance ministers.

The report will also incorporate the outcomes from the FSB’s peer reviews, those of the standard-setting bodies, its impact assessments, and analysis of the effects of reforms on long-term finance and on emerging market economies.

The FSB is reviewing the consultation responses on its proposal for total loss absorbing capacity published last November, and the various TLAC impact assessment studies are well underway. While there are a number of issues to be addressed, work is on track for the FSB to finalize the international standard by the Antalya Summit.

The FSB published in March a second consultative paper on methodologies to identify non-bank, non-insurer global systemically important institutions.

“The growing use of CCPs for standardized OTC derivatives transactions is reducing systemic risks, but we must also ensure that CCPs themselves are not too big to fail,” Carney said.

At the request of the G20 finance ministers, the FSB is working with Iosco and the Basel Committee on a coordinated work plan to promote CCP resilience, recovery planning and resolvability. Key elements include evaluating existing measures for CCP resilience, including loss absorption capacity, liquidity and stress testing, and analyzing the interconnections between CCPs and the banks that are their clearing members, and potential channels for transmission of risk.

The FSB is prioritizing work to understand and address vulnerabilities in capital market and asset management activities. This will comprise two linked projects. The first will examine the likely near-term risk channels and the options that currently exist for addressing these. The second will consider the longer-term development of these markets and whether additional policy tools should be applied to asset managers according to the activities they undertake with the aim of mitigating systemic risks.

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