Week InReview | FSB waits on criteria for NBNI SIFIs | Regulators want more details on insurers' living wills for bankruptcy | BIS targets May 2017 for FX code of conduct | IOSCO issues review of derivative market intermediaries rules | Binge Reading Disorder
Blue Moon Friday, July 31, 2015
FSB waits on criteria for NBNI SIFIs
Final assessments after further analysis
(Jul 30) The Financial Stability Board will wait to finalize its assessment methodologies for non-bank non-insurer global systemically important financial institutions until its current work on financial-stability risks posed by asset managers is complete.
  • "The ongoing work on financial stability risks from asset management activities was set in train in March, and is focused on risks associated with market liquidity and asset management activities in the current conjuncture, as well as potential structural sources of vulnerability associated with asset management activities," the FSB says. "This work will evaluate the role that existing or additional activity-based policy measures could play in mitigating potential risks, and make policy recommendations as necessary."
  • "The FSB will discuss the initial findings from the work on asset management activities at its plenary meeting in September," the regulator says. "It will report on this work to the G-20 later this year and will develop activities-based policy recommendations as necessary by spring 2016."
  • "The FSB, jointly with IOSCO, will then conduct further analysis and finalize the NBNI G-SIFI asset management assessment methodology, with a focus on any residual entity-based sources of systemic risk from distress or disorderly failure that cannot be effectively addressed by market-wide activities-based policies."
Insurers' living wills for bankruptcy
Regulators want more details

(Jul 28) American International Group Inc., Prudential Financial Inc., and General Electric Corp. need more detail in their living wills on the obstacles they'll need to clear on their way through bankruptcy, according to their first response from regulators.

  • Agencies reviewing the strategies found them short on information about how the companies are being made more resolvable in a failure, regulators said in a statement Tuesday
  • FDIC, Federal Reserve said the companies need more robust public sections of their living wills
  • Non-banks deemed systemically important by the members of the Financial Stability Oversight Council are required under the Dodd-Frank Act to file plans at the end of each year, with the most recent addition, MetLife Inc., having to file by the end of 2016. The New York-based insurer is challenging the FSOC designation in federal court.
May 2017 targeted for FX code of conduct
BIS forms Foreign Exchange Working Group (FXWG)
(Jul 23) A newly formed Foreign Exchange Working Group at the Bank for International Settlements to develop a global code of conduct for participants in the foreign exchange market will focus on how to harmonize rules and ensure compliance by May 2017. The code will be principles-based -- rather than rules-based -- and will provide guidance on what is, as well as what is not, appropriate behavior for practitioners in the forex market. The BIS confirmed that work by the FXWG, announced by governors of the BIS in May, has now begun, with the group recently holding its first meeting in Singapore.
Derivative market intermediaries rules

IOSCO issues review

(Jul 29) The International Organization of Securities Commissions published a review of the progress jurisdictions have made in adopting legislation, regulation and policies in relation to derivatives market intermediaries. The IOSCO review covers six areas: 
  • scope of regulatory reform including framework for regulation and definition of DMIs
  • registration and licensing standards
  • capital standards or other financial resources requirements for non-prudentially regulated DMIs
  • business conduct standards
  • business supervision standards, and 
  • recordkeeping standards
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