Key Attributes of Effective Resolution Regimes for Financial Institutions
The Key Attributes of Effective Resolution Regimes for Financial Institutions (the 'Key Attributes') set out the core elements that the FSB considers to be necessary for an effective resolution regime. Their implementation should allow authorities to resolve financial institutions in an orderly manner without taxpayer exposure to loss from solvency support, while maintaining continuity of their vital economic functions. The FSB adopted the Key Attributes in October 2011, and the G20 Leaders endorsed them at the Cannes Summit in November 2011 as "a new international standards for resolution regimes". The 2014 version of the Key Attributes incorporates guidance on their application to non-bank financial institutions and on arrangements for information sharing to support the effective resolution.
The Key Attributes set out twelve essential features that should be part of the resolution regimes of all jurisdictions. They relate to:
Set-off, netting, collateralisation, segregation of client assets
Funding of firms in resolution
Legal framework conditions for cross-border cooperation
Crisis Management Groups (CMGs)
Institution-specific cross-border cooperation agreements
Recovery and resolution planning
Access to information and information sharing.
The Annexes to the Key Attributes provide more specific guidance to assist authorities in implementing the Key Attributes with respect to certain aspects of resolution regimes and to particular sectors. The Annexes fall into two categories:
General guidance on the implementation of the Key Attributes (Appendix I)
I-Annex 1: Information sharing for Resolution Purposes (KAs 7 and 12)
I-Annex 2: Institution-specific Cross-border Cooperation Agreements (KA 9)
I-Annex 3: Resolvability Assessments (KA 10)
I-Annex 4: Recovery and Resolution Plans (KA 11)
I-Annex 5: Temporary Stays on Early Termination Rights (KA 4)
Sector-specific Guidance (Appendix II)
II-Annex 1: Resolution of financial market infrastructure (FMIs) and FMI Participants
II-Annex 2: Resolution of Insurers
II-Annex 3: Protection of Client Assets in Resolution
The Key Attributes constitute an ‘umbrella’ standard for resolution regimes for all types of financial institutions. However, not all attributes are equally relevant for all sectors. Some Key Attributes require adaptation and sector-specific interpretation. A modular approach has therefore been adopted with respect to the assessment methodology for different types of institutions, which allows for the development of criteria that are tailored to the specific features of a particular sector and facilitates sector-specific assessment of the Key Attributes.
The Key Attributes Assessment Methodology for the Banking Sector sets out essential criteria to guide the assessment of compliance of a jurisdiction’s bank resolution framework with the Key Attributes. It was published in October 2016 and was developed in close collaboration with experts from FSB jurisdictions, relevant standard-setting bodies, the International Monetary Fund (IMF) and the World Bank. The methodology is designed to promote consistent assessments across jurisdictions (including as part of IMF-World Bank Reports on the Observance of Standards and Codes) and also to provide guidance to jurisdictions when adopting or amending their bank resolution regimes to implement the Key Attributes.