Global Securities Financing Data Collection and Aggregation: Frequently Asked Questions

12 April 2021 | PDF full text (525 KB)

Securities financing transactions (SFTs) such as securities lending and repurchase agreements (repos) play a crucial role in supporting price discovery and secondary market liquidity for a wide variety of securities. However, such transactions can also be used to take on leverage and can lead to maturity and liquidity mismatched exposures. They therefore can pose risks to financial stability.

The FSB published policy recommendations to address financial stability risks in SFTs in August 2013. In November 2015, the FSB developed standards and processes for collecting and aggregating global data on SFTs (SFT Data Standards). To facilitate national implementation of the SFT Data Standards, the FSB has developed reporting guidelines.

Drawing on practical experience, the FSB is providing these Frequently Asked Questions (FAQs) to promote a common approach and to further help national implementation of the SFT Data Standards. The FAQs will continue to be updated as market practices evolve.

Please contact the FSB Secretariat ([email protected]) for any inquiries.

FSB seeks stakeholders’ feedback on their experience with the common template for gathering information about continuity of access to financial market infrastructures (FMIs) for firms in resolution

6 April 2021

The FSB is conducting a survey to gather stakeholders’ feedback on its common template for collecting information on continuity of access to financial market infrastructures (FMIs) for firms in resolution. The common template for financial market infrastructures (FMIs), which takes the form of a questionnaire (the Questionnaire), was published in August 2020. The use of a common template should reduce the “many to one” nature of inquiries from FMI participants and authorities to FMIs for resolution planning and streamline the provision of this information by FMIs to firms and authorities.

This survey  is part of the FSB’s outreach strategy with external stakeholders regarding the topic of Continuity of Access to FMIs for firms in resolution. Several bank resolution authorities are, concurrently, also working to provide FMIs with further insight into their bank resolution toolkits and the impact of these tools on a bank’s ability to maintain continuity of access to FMI services in resolution.1

All FMIs (as providers of responses to the Questionnaire) as well as firms subject to a resolution planning requirement and bank resolution authorities (as users of FMIs’ responses to the Questionnaire) are encouraged to participate in this online survey. Stakeholders’ input will support the efforts of FSB member authorities to ensure the Questionnaire template remains relevant and accessible, and help to reduce the burden of information gathering for firms on this topic.

The survey closes on Monday 3 May at 08:59 AM CEST.

  1. For instance, the Single Resolution Board recently published an overview of this topic in the Banking Union. [←]

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: April 2021

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The factors to consider on COVID-19 support measures, and a roadmap to address climate-related financial risks.

This letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 7 April notes that, while progress is moving at different speeds across jurisdictions, the vaccine rollout heralds an inflection point in the COVID-19 pandemic. While it is sensible to keep measures that support financial system stability and financing of the real economy in place as long as needed, the factors to be considered in deciding whether to extend, amend and, eventually, end support measures are taking shape.

The FSB report on these factors notes that withdrawal of support measures before the macroeconomic outlook has stabilised could be associated with significant immediate risks to financial stability. But financial stability risks may gradually build if support measures remain in place for too long. On balance, most authorities currently believe that the costs of premature withdrawal of support could be more significant than maintaining support for too long. Overall, a flexible, state-contingent approach can help to minimise financial stability risks. FSB members have committed to coordinate on the unwinding of support measures and the FSB will continue to support that coordination.

The Chair’s letter applauds the significant progress made on too-big-to-fail (TBTF) reforms for banks. The evaluation of TBTF reforms for banks – the largest evaluation that the FSB has carried out so far – suggests that reforms have reduced systemic risks, enhanced the credibility of resolution and market discipline, and ultimately produced net benefits to society. Nevertheless, TBTF reforms can be developed further, notably on implementation of Total Loss Absorbing Capacity (TLAC) and transparency of resolution funding mechanisms.

Moreover, some risks have moved outside the banking system. The FSB’s Holistic Review of the March 2020 market turmoil examined the increasingly important role of – and vulnerabilities in – non-bank financial intermediation (NBFI). The FSB’s NBFI work programme seeks to address these vulnerabilities. A first deliverable will be to submit policy proposals to enhance money market fund resilience to the G20 in July.

Finally, the letter notes the importance of addressing issues related to climate change. Three climate-related workstreams are currently underway in the FSB, covering data, disclosures and regulatory and supervisory practices. In July, the FSB will provide the G20 with two reports, on ways to promote consistent, high-quality climate disclosures in line with the recommendations of the Task Force for Climate-related Financial Disclosures; and on the data necessary for the assessment of financial stability risks and related data gaps.

While the greater momentum in climate work by various bodies is welcome, it also increases the importance of strategic vision, good coordination, and clear communication to the G20 and the public. The FSB will present to the G20 a coordinated, forward-looking roadmap to address climate-related financial risk. This roadmap will be key to promoting rapid progress amongst jurisdictions. To enable better coordination, the FSB has invited the Network for Greening the Financial System (NGFS) to participate in FSB climate-related work, and the FSB will apply for observer status in the NGFS. The FSB will also coordinate closely with the G20 group on sustainable finance re-established by the Italian G20 Presidency as it develops its broader roadmap on sustainable finance, so that the FSB’s work dovetails with theirs.

COVID-19 support measures: Extending, amending and ending

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A speedy, sizeable and sweeping policy response has been key to limiting the economic fallout of the COVID-19 shock.

In April 2020, the G20 finance ministers and central bank governors committed to follow the five principles set out in the FSB’s report on COVID-19. They reiterated their commitment to share information on a timely basis to assess and address financial stability risks from COVID-19, and to coordinate on the unwinding of the temporary measures.  Against this background, the Presidency of the G20 asked the FSB to report to the G20 finance ministers and governors in April 2021 on policy considerations relating to the unwinding of support measures.

In view of the current situation, most of the COVID-19 policy support measures remain in place, and their withdrawal is typically not imminent. Nevertheless, policymakers need to form their views on whether, when and how to extend, amend or unwind their support measures. The report discusses the extent to which measures have been unwound so far and the matters to which policymakers should have regard when considering whether to extend, amend or end their economic and financial support measures. Its purpose is to assist G20 members and other policymakers by providing a benchmark and drawing attention to practices in FSB member jurisdictions.

The report notes that withdrawal of support measures before the macroeconomic outlook has stabilised could be associated with significant immediate risks to financial stability. At the same time, financial stability risks may gradually build if support measures remain in place for too long. On balance, most authorities believe that premature withdrawal of support could inflict more damage to the economy than maintaining support for too long.

Authorities have a number of options for managing these trade-offs and may follow a flexible, state-contingent approach, adjusting and withdrawing gradually, by:

  • Ensuring that measures are targeted to those most affected.
  • Requiring beneficiaries to opt in to receive support rather than automatically.
  • Making the terms on which support is provided progressively less generous.
  • Sequencing the withdrawal of support measures rather than withdrawing all at once.

Clear, consistent and timely communication about policy intentions can help reduce the costs associated with withdrawal of support, not least by reducing the risk of surprises and abrupt adjustments in financial markets.

The report also notes the importance of a resilient and well-functioning financial system as a precondition for smooth adjustment as public support is phased out. In addition, further work is needed to understand the risk of harmful cross-border and cross-sector spillovers, including possible feedback loops, and options to mitigate the risk.

FSB members have committed to sharing information and returning to full alignment with global standards in order to minimise the risk of harmful market fragmentation. The FSB will continue to support international coordination on the unwinding of COVID-19 support measures.

FSB Chair updates G20 on COVID-19 support measures, and a roadmap to address climate-related financial risks

Press enquiries:
+41 61 280 8477
[email protected]
Ref no: 6/2021

The Financial Stability Board (FSB) today published a letter from the FSB Chair, Randal K. Quarles, to G20 Finance Ministers and Central Bank Governors ahead of their virtual meeting on 7 April. The FSB also delivered to the G20 a report on factors to be considered in extending, amending and ending COVID-19 support measures.

The letter notes that, while progress is moving at different speeds across jurisdictions, the vaccine rollout heralds an inflection point in the COVID-19 pandemic. While it is sensible to keep measures that support financial system stability and financing of the real economy in place as long as needed,  the factors to be considered in deciding whether to extend, amend and, eventually, end support measures are taking shape.

The FSB report on these factors notes that withdrawal of support measures before the macroeconomic outlook has stabilised could be associated with significant immediate risks to financial stability. But financial stability risks may gradually build if support measures remain in place for too long. On balance, most authorities currently believe that the costs of premature withdrawal of support could be more significant than maintaining support for too long. Overall, a flexible, state-contingent approach can help to minimise financial stability risks. FSB members have committed to coordinate on the unwinding of support measures and the FSB will continue to support that coordination.

The Chair’s letter applauds the significant progress made on too-big-to-fail (TBTF) reforms for banks. The evaluation of TBTF reforms for banks – the largest evaluation that the FSB has carried out so far – suggests that reforms have reduced systemic risks, enhanced the credibility of resolution and market discipline, and ultimately produced net benefits to society. Nevertheless, TBTF reforms can be developed further, notably on implementation of Total Loss Absorbing Capacity (TLAC) and transparency of resolution funding mechanisms.

Moreover, some risks have moved outside the banking system. The FSB’s Holistic Review of the March 2020 market turmoil examined the increasingly important role of – and vulnerabilities in – non-bank financial intermediation (NBFI). The FSB’s NBFI work programme seeks to address these vulnerabilities. A first deliverable will be to submit policy proposals to enhance money market fund resilience to the G20 in July.

Finally, the letter notes the importance of addressing issues related to climate change. Three climate-related workstreams are currently underway in the FSB, covering data, disclosures and regulatory and supervisory practices. In July, the FSB will provide the G20 with two reports, on ways to promote consistent, high-quality climate disclosures in line with the recommendations of the Task Force for Climate-related Financial Disclosures; and on the data necessary for the assessment of financial stability risks and related data gaps.

While the greater momentum in climate work by various bodies is welcome, it also increases the importance of strategic vision, good coordination, and clear communication to the G20 and the public. The FSB will present to the G20 a coordinated, forward-looking roadmap to address climate-related financial risk. This roadmap will be key to promoting rapid progress amongst jurisdictions. To enable better coordination, the FSB has invited the Network for Greening the Financial System (NGFS) to participate in FSB climate-related work, and the FSB will apply for observer status in the NGFS. The FSB will also coordinate closely with the G20 group on sustainable finance re-established by the Italian G20 Presidency as it develops its broader roadmap on sustainable finance, so that the FSB’s work dovetails with theirs.

Notes to editors

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

FSB publishes final report of the evaluation of too-big-to-fail reforms for banks

31 March 2021

Press enquiries:
+41 61 280 8477
[email protected]
Ref no: 5/2021

The Financial Stability Board (FSB) today published the final report on its evaluation of the effects of too-big-to-fail (TBTF) reforms for systemically important banks (SIBs). The evaluation examines the extent to which the reforms have reduced the systemic and moral hazard risks associated with SIBs, as well as their broader effects on the financial system.

The evaluation finds that TBTF reforms have made banks more resilient and resolvable, and that they have produced net benefits to society. Indicators of systemic risk and moral hazard moved in the right direction, suggesting that market participants view these reforms as credible. Increased bank resilience and greater market discipline have been tested by the COVID-19 pandemic. However, banks – thanks also to the unprecedented fiscal, monetary and supervisory support measures – have so far been able to absorb the shock.

Nevertheless, the evaluation finds some gaps that need to be addressed:

  • Resolution reforms should be implemented in full to enhance the feasibility and credibility of resolution, minimising the need for state support of failing banks. This includes further work to enhance the resolvability of SIBs.

  • There is still scope to improve public disclosures of information relating to resolution frameworks and funding mechanisms, the resolvability of SIBs and resolution actions.

  • information may be needed for public authorities to assess the potential impact of resolution actions (such a bail-in) on the financial system and the economy.

  • The application of the reforms to domestic systemically important banks warrants further monitoring. In addition, risks arising from the shift of credit intermediation to non-bank financial intermediaries should continue to be closely monitored.

Claudia M. Buch, Vice-President of the Deutsche Bundesbank and chair of the group that produced the report, said: “Having robust banks and a mechanism to resolve them in the event of failure is key to maintaining financial stability. While the evaluation highlights the progress we have made, more can be done to fully realise the benefits of these reforms. I look forward to further work by the FSB and standard-setting bodies to close the gaps we have identified”.

Notes to editors

Following the global financial crisis, the G20 launched a comprehensive programme of financial reforms to increase the resilience of the global financial system, while preserving its open and integrated structure. In order to assess the effects of these reforms, the FSB published a framework for the post-implementation evaluation of the effects of the G20 financial regulatory reforms in July 2017.

In May 2019, the FSB launched an evaluation of too-big-to-fail reforms as they apply to banks. The TBTF reforms that were evaluated have three components: (i) standards for additional loss absorbency in the form of capital surcharges and total loss-absorbing capacity requirements; (ii) recommendations for enhanced supervision and heightened supervisory expectations; and (iii) policies to put in place effective resolution regimes and resolution planning to improve the resolvability of banks.

This final report reflects feedback received on a consultative version of the report, which the FSB published in June 2020. It contains analytical updates using market data, covering the period since the outbreak of the COVID-19 pandemic, as well as more extensive analysis of the issues raised in the consultation.

The FSB coordinates at the international level the work of national financial authorities and international standard-setting bodies and develops and promotes the implementation of effective regulatory, supervisory, and other financial sector policies in the interest of financial stability. It brings together national authorities responsible for financial stability in 24 countries and jurisdictions, international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. The FSB also conducts outreach with approximately 70 other jurisdictions through its six Regional Consultative Groups.

The FSB is chaired by Randal K. Quarles, Vice Chairman, US Federal Reserve; its Vice Chair is Klaas Knot, President of De Nederlandsche Bank. The FSB Secretariat is located in Basel, Switzerland, and hosted by the Bank for International Settlements.

Evaluation of the effects of too-big-to-fail reforms: Final Report

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This final report reflects feedback and more extensive description of issues raised in public consultation, as well as analytical updates since the outbreak of the COVID-19 pandemic.

Summary of document history

Summary of document history

This final report reflects feedback and more extensive description of issues raised in public consultation, as well as analytical updates since the outbreak of the COVID-19 pandemic.

The Financial Stability Board (FSB) today published the final report on its evaluation of the effects of too-big-to-fail (TBTF) reforms for systemically important banks (SIBs). The evaluation examines the extent to which the reforms have reduced the systemic and moral hazard risks associated with SIBs, as well as their broader effects on the financial system.

The evaluation finds that TBTF reforms have made banks more resilient and resolvable, and that reforms have produced net benefits to society. Indicators of systemic risk and moral hazard moved in the right direction, suggesting that market participants view these reforms as credible. Increased bank resilience and greater market discipline have been tested by the COVID-19 pandemic. However, banks – thanks also to the unprecedented fiscal, monetary and supervisory support measures – have so far been able to absorb the shock.

Nevertheless, the evaluation finds some gaps that need to be addressed:

  • Resolution reforms should be implemented in full to enhance the feasibility and credibility of resolution, minimising the need for state support of failing banks. This includes further work to enhance the resolvability of SIBs.

  • There is still scope to improve public disclosures of information relating to resolution frameworks and funding mechanisms and resolution actions. Additional information, for example on Total Loss Absorbing Capital (TLAC) holdings, could enable public authorities and market participants to assess the potential impact of resolution actions.

  • The application of the reforms to domestic systemically important banks warrants further monitoring and improvements in data.

  • The report also highlights that, in response to TBTF reforms, risks associated with credit intermediation may have shifted to non-bank finance. Following up on its Holistic Review of the March 2020 market turmoil, the FSB has embarked on a comprehensive work programme to enhance the resilience of non-bank financial intermediation.

Claudia M. Buch, Vice-President of the Deutsche Bundesbank and chair of the group that produced the report, said: “Higher capital for systemically important banks is key for financial stability, and the report shows no material negative side effects. But we also need mechanisms to restructure and resolve banks in stress. While the evaluation highlights the progress we have made, more can be done to fully realise the benefits of these reforms. I look forward to further work by the FSB and standard-setting bodies to close the gaps we have identified”.

Evaluation of the effects of too-big-to-fail reforms: Overview of Responses to the Public Consultation

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Summary of document history

Summary of document history

On 28 June 2020 the FSB published a consultative document on the evaluation of the effects of the too-big-to-fail reforms for systemically important banks. The FSB received 28 written responses from a variety of stakeholders. This document summarises the responses received and sets out the main changes made to the evaluation report as a result.

Principles for the Sound Management of Operational Risk

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The BCBS recognises that the exact approach for operational risk management chosen by an individual bank will depend on a range of factors, including its size and sophistication and the nature and complexity of its activities. However, despite these differences, clear strategies and oversight by the board of directors and senior management, a strong operational risk culture and internal control culture (including, among other things, clear lines of responsibility and segregation of duties), effective internal reporting, and contingency planning are all crucial elements of an effective operational risk management framework for banks of any size and scope. The document outlines a set of principles that provide a framework for the effective management and supervision of operational risk, for use by banks and supervisory authorities when evaluating operational risk management policies and practices. It details eleven principles of sound operational risk management covering governance, risk management environment, and the role of disclosure.