The FSB publishes its first annual Report

On January 29th, 2015, the FSB published its first annual report. Apart from presenting the financial staements from Jan, 1st 2013 through March 31, 2014  (which is just an exercice in style, as the FSB has neither assets, nor liabiliaties or income), this document summarizes the current priorities of the FSB and takes stock of the situation in the many fields of  the financial activity that it covers. The main points are:

Reducing the moral hazard posed by the SIFIs:

Main takeaways:

  • the current list of G-SIBs has 29 names. Starting from 2016, the additional loss-absorbency common equity requirement for these Banks will be phased-in over three years.
  •  the current list of GSIIs has 9 names. The IAIS  published in 2014 specific policy measures and an overall framework for macroprudential policy insurance, which were endorsed by the FSB.
  • the FSB and the SSB continue to extend the SIFI framework . In January 2014, the FSB published a consultation on methodologies for assessing non-bank non-insurers SIFI (NBNI G-SIFIs). The work on scope and applicable policies is still in progress.
  • the final version of the ‘guidance on risk culture’ was published in April 2014. On that date, the FSB reported also on efforts to enhance supervisory effectiveness and identified areas where more work is needed.
  • the resolution framework has now been drafted and explained   in several important documents written in conjunction  with the IMF, the SSBs and the World Bank.
  • the progress of the  OTC derivatives reform has been assessed in April 2014; the FSB continues to work with memeber jurisdictions to complete the reforms, settle remaining cross-border issues and ensure the consistency across jurisdictions.

 Strenggthening the oversight and regulation of shadow-banking:

Main takeaways:

  • QAs of  September 2014, , the FSB considers that its its policy recommendations regarding the SB system stand largely finalised, excepting those concerning the repos, which remain to be refined.
  • In November 2013, the FSB released a global monitoring report including data from 25 jurisdictions and the euro-area as a whole.
Credit ratings:
In May 2014, the FSB published the final peer-review report on planned actions to reduce reliance on the CRAs.
Financial benchmarks:
Main takeaways:
  • The FSB has established a high-level Official sector Steering Group (OSSG) to review the interest rate banchmarks; its final report was published in July 2014.
  • A separate working group on FX was established and produced a recommendations report on September 2014.
Addressing data gaps:
Main takeaways:
  • The FSB is developing a common data template for G-SIBs to analyse their exposures and funding depndencies by counterparty, country, market, currency, sector and instrument.
  • The international data hub hosted by the BIS is collecting from 2013 harmonised firm-level data on G-SIBs and provide access to the hub to home supervisory authorities and central Banks.
  • In March 2014, the FSB approved the phase 2 of the initiative . It also strated further work on phase 3 (2016) aimed at collecting more granular data on G-SIBs exposures to different markets and sectors.
Advancing transparency through the LEI:
Main takeaways:
  • The ROC was established in January 2013 as a standalone body responsible for the governance of the LEI.
  • The GLEIF was  established in June 2014 to act as the operational arm of the LEIS.

 Ehanced disclosure task-force (EDTF):

  • the EDTF issued principles and recommendations for disclosures in October 2012.

Monitoring implementation and strengthening adherence to international standards:

Main takeaways:

  • Current priority areas of enhanced monitoring are the Basel capital requirements framework, the OTC derivatives markets reforms, compensantion practices, policy measures for G-SIFIs, resolution frameworks and shadow banking.
  • The FSB most intensive monitoring mechanism is the peer-review program, conducted through the standing committee on Standards implementation.
  • In December 2013, the FSB published an update of its initiative to promote jurisdictions adherence to standards for supervisory and regulatory cooperation and information exchange. One jurisdiction, Venezuela, is considered to be non-cooperative.

Impact of Regulatory reforms on emerging markets and developong economies:

  • The FSB reports on unintended consequences of international reforms affecting the EMDEs, and published an update in September 2013.

Strengthening accounting standards:

  • The FSB encourages the IASB and the FASB to complete their convergence project and monitors theirs progress in implementing specific G and FSB accounting recommendations.

Financial regulatory factors affecting the availability of long-term finance:

  • In February 2013 the FSB provided an initial report to G20, and an update in September 2014.