FSB Chair Dynamic Reforms
On Apr. 20, FSB Chair Carney said reform implementation to be dynamic.
- Adjust measures if unnecessary duplication, inconsistencies, or unintended impacts.
- Resist steps that would fragment the global financial system, such as trade barriers.
- Build system of deference to each other’s approaches, when outcomes comparable.
- Post-Reform Conduct
- Due to effort of FSB, the financial system is safer, simpler and fairer to participants.
- Increase in capital, addressed non-bank asset managers, allow failure via resolution.
- Market discipline is coming back, are also addressing the root causes of misconduct.
- Banks’ misconduct costs of $320bn, capital could have supported $5 trillion lending.
- Improve firm governance and compensation structures to align better risks, rewards.
- New global standards of conduct in fixed income, commodities and currency market.
- Reforms to financial benchmark arrangements, to reduce risks of being manipulated.
- Senior Manager Accountability
- Cited UK Senior Managers Regime (SMR) for senior decision-makers, of major firms.
- SMR addresses creates link between seniority and accountability for action beneath.
- Managers must take steps-training/oversight-to prevent or stop regulatory breaches.
- Some global firms were voluntarily adopting part of SMR’s certification requirement.
- FSB is now reviewing merit of such responsibility mapping, on an international basis.
- Promoting Dynamism
- Essential to fully implement G20 reforms, but should do so as efficiently as possible.
- Authorities must learn by doing and make adjustments as needed to optimize effort.
- FSB is developing structured framework to evaluate reforms, deliver to G20 Summit.
- Support better impact analysis and inform future decisions on possible adjustments.
- Completing Reforms
- Risk of reform fatigue on implementation momentum, Brexit negotiation outcomes.
- Need to complete Basel III, and ending too big to fail, system is at fork in the road.
- Require that shadow banking fully transformed into resilient market-based finance.
- Durable market infrastructure is in place, complete the job of ending too big to fail.
- Ensure that emerging vulnerabilities were addressed in a timely, consistent manner.
- Resisting Fragmentation
- Lack of trust and cooperation would harden fragmentation, and disrupt capital flow.
- Supervisors need confidence that effort to promote stability reciprocated elsewhere.
- National authorities impose local requirements on domestic entities of foreign firms.
- Instead, high global standards should create trust from transparent implementation.
- Intensive supervisory cooperation leads to system of equivalence. mutual deference.
- Working Together
- G20 members will be positioned to defer to other’s comparable regulatory outcomes.
- With commitment to common minimum standard and open supervisory co-operation.
- Reinforce by using independent peer review, and an independent dispute resolution.
- Brexit will test cooperation, as UK and EU have the same rules and high cooperation.
- Markets are integrated, potential to create a template for trade in financial services.
||BoE; FSB; UK FCA; UK PRA
||B/D; Bank; IA; Ins
||Sp, PR, SMR, Brexit
||Compliance; C-Suite; Financial; Legal; Registration; Reporting; Risk; Treasury
||Global Regulator; United Kingdom
||Banking; Corporate; Derivatives; Fund Mgt; Insurance; Securities
Last substantive update on 04/20/2017