Shearman & Sterling LLP | FinReg | Financial Stability Board Publishes Upcoming Resolution Priorities for Banks, Insurers and CCPs
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  • Financial Stability Board Publishes Upcoming Resolution Priorities for Banks, Insurers and CCPs
    The Financial Stability Board has published its 2018 resolution report, entitled "Keeping the pressure up," setting out: (i) the progress in implementing the FSB's resolution policies for CCPs and in the banking and insurance sectors; (ii) the next steps in monitoring and evaluating the effects of resolution reforms; and (iii) the actions and timelines for 2019 and beyond. The FSB highlights that, although substantial progress has been made, firms need to continue work to improve their resolvability, and authorities and lawmakers need to complete the reforms and implement them fully.

    The FSB report describes the priority areas for global systemically important banks, including the implementation of technical and operational capabilities to ensure that a resolution plan can be timely and effectively executed, if needed. Another key area is implementation of the total loss absorbing capacity (TLAC) requirements, in particular, internal TLAC. In June 2018, the FSB launched a call for feedback on the technical implementation of TLAC for G-SIBS to assess whether implementation aligns with the timelines and objectives set out in the TLAC Standard. The FSB will report on the outcomes of that review during 2019. Work will also be required to ensure (i) cross-border recognition of temporary stays on early termination rights in financial contracts; and (ii) continuity of access to financial market infrastructures and FMI intermediaries.

    On CCP resolution, the FSB noted that most jurisdictions do not yet have a comprehensive regime and that resolution planning work is needed, in particular for those CCPs that have been identified as systemically important in more than one jurisdiction. To support this work, the FSB has published a discussion paper on financial resources and on the treatment of CCP equity in resolution and intends to develop guidance by 2020.

    The FSB report states that most jurisdictions do not have complete insurer resolution regimes in place. The FSB is monitoring resolvability in the insurance sector to assess the progress made in this area.

    View the report.

    View details of the FSB's discussion paper on CCP financial resources.

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