2015年-FSB全球金融稳定委员会_Removing_Remaining_Obstacles_to_Resolvability_29页_696kb

Summary of "Removing Remaining Obstacles to Resolvability"

Core Content

This report outlines the progress made by the Financial Stability Board (FSB) in implementing post-crisis reforms to end the "too big to fail" (TBTF) phenomenon and enhance the resolvability of global systemically important financial institutions (SIFIs). It provides an overview of key initiatives, challenges, and next steps in resolution planning and execution, particularly for global systemically important banks (G-SIBs), global systemically important insurers (G-SIIs), and financial market infrastructures (FMIs).

Main Points

1. Policy Agenda to End "Too Big to Fail"

The FSB has finalised a new standard on Total Loss-absorbing Capacity (TLAC) for G-SIBs, which sets minimum requirements for loss absorption and recapitalisation capacity. This standard incorporates elements from Basel III and aims to ensure that G-SIBs can be resolved without exposing public funds to loss.

• TLAC Objective: To improve market confidence in the resolvability of G-SIBs, reduce implicit public subsidies, and ensure a level playing field internationally.
• TLAC Application: The minimum TLAC requirement is applied to each resolution entity within a G-SIB, based on the consolidated balance sheet of the resolution group.
• Bail-in Mechanism: TLAC instruments can be written down or converted into equity during resolution, with losses absorbed first by shareholders and then by creditors, following the creditor hierarchy.

2. Cross-border Effectiveness of Resolution Actions

The FSB has issued Guiding Principles to ensure that resolution actions taken in one jurisdiction can be effectively implemented across borders. These principles support both statutory and contractual approaches to cross-border recognition.

• Contractual Recognition: The ISDA Resolution Stay Protocol is being extended to cover securities financing transactions (SFTs), including securities lending and repurchase agreements.
• Cooperation Agreements (CoAgs): 13 CoAgs have been signed among home and host authorities for G-SIBs, facilitating cooperation during resolution. Further efforts are needed to engage with non-CMG host jurisdictions.

3. Resolvability Assessment Process (RAP) for G-SIBs

The first round of the RAP for G-SIBs, conducted by home authorities, showed significant progress in resolution planning, but also highlighted several remaining impediments.

• Key Impediments Identified:
  • Funding and Liquidity Needs: Inadequate liquidity and collateral can hinder resolution execution.
  • Operational Continuity: Lack of robust arrangements for critical shared services and insufficient contractual clarity pose challenges.
  • Access to Financial Market Infrastructures (FMIs): Ensuring continued access to payment, settlement, and clearing services is critical to avoid exacerbating financial instability.
  • Information Capabilities: Resolution authorities need timely and accurate information to make informed decisions.
  • Implementation of TLAC Standard: Effective implementation of the TLAC standard is essential for resolvability.
  • Bail-in Execution: Challenges remain in executing bail-in, including valuation, securities management, and regulatory approvals.
  • Cross-border Enforceability: Limited adherence to the ISDA Protocol affects the effectiveness of cross-border resolution actions.

4. Next Steps and Future Work

The FSB is prioritising operational aspects of resolution planning, including:

• Funding in Resolution: Developing guidance to support temporary funding for G-SIBs.
• Operational Continuity: Enhancing arrangements for critical shared services.
• FMIs Access: Ensuring continuity of access to payment and settlement services.
• Internal TLAC: Implementing mechanisms to provide loss-absorbing capacity to subsidiaries.
• Bail-in Execution: Establishing processes for effective bail-in, including valuation and governance transfer.

5. Insurance and Financial Market Infrastructure (FMI) Sector

• Insurance Sector: Resolution regimes and planning for G-SIIs are less advanced than for banks. A first round of RAP for G-SIIs is planned for 2016.
• FMIs: Work is ongoing to develop resolution regimes for central counterparties (CCPs), with most FSB jurisdictions planning to implement them.

Key Information

• The TLAC standard is set to be implemented in two phases: 16% RWA and 6% of the Basel III leverage ratio denominator by 2019, and 18% RWA and 6.75% of the Basel III leverage ratio denominator by 2022.
• Cross-border cooperation is a critical component of resolution planning, with CoAgs and contractual approaches playing a key role.
• FSB Guidance on cross-border cooperation and information sharing has been issued to support non-CMG host jurisdictions.
• The first RAP for G-SIBs revealed that while progress has been made, significant challenges remain in several areas, including legal frameworks, operational continuity, and cross-border enforceability.

Conclusion

The FSB has made substantial progress in developing and implementing reforms to improve the resolvability of G-SIFIs, particularly G-SIBs. However, continued efforts are required to address remaining obstacles and ensure that resolution strategies are operational and effective across borders. The focus is now on enhancing operational aspects, ensuring legal and regulatory alignment, and promoting broader adoption of contractual mechanisms like the ISDA Protocol.