Share this article and your comments with peers on social media Keywords Banking industry,  Life insurance industryCompanies Financial Stability Board Global financial regulators are launching public consultations concerning the design of resolution regimes for firms that make up the plumbing of the financial system. In the wake of the global financial crisis one of the central goals for policymakers has been to address the issue of financial institutions that are deemed “too big to fail”, which invites moral hazard. Efforts to deal with this problem initially focused on the world’s biggest banks, but regulators are also turning their attention to key non-bank firms, such as central counterparties, securities depositories, insurers, and other firms that hold client assets. James Langton Facebook LinkedIn Twitter OSFI seeks to step up sector’s cyber resilience Related news On Monday, the Financial Stability Board (FSB) initiated a consultation on applying the principles of resolution regimes that have been developed for banks to non-banks as well. These principles “set out the core elements considered necessary to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to loss,” it says. “They constitute an ‘umbrella’ standard that applies for all parts of the financial sector that could cause systemic problems.” The FSB also proposed guidance that is designed to assist various jurisdictions with the implementation of the key attributes of resolution regimes for non-bank institutions. At the same time, the Committee on Payment and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO) also published their own report on the recovery of systemically-important financial market infrastructure firms, such as payment and settlement systems and depositories. The CPSS-IOSCO report provides guidance to financial market infrastructures on how to develop plans to enable them to recover from threats to their viability; and, it provides guidance to regulators in carrying out their responsibilities for developing and implementing recovery plans and tools. However, the groups note that it does not create additional standards for infrastructure firms. “Today’s publication of draft guidance on the resolution of non-bank financial institutions represents further significant progress in international efforts to develop the powers and tools that authorities need to manage the failure of any type of systemic institution without taxpayers bearing the costs,” said FSB chair, and current governor of the Bank of England, Mark Carney. “Resolution of firms from other financial sectors has lagged behind the progress made in relation to banks. In light of the move towards mandatory clearing of OTC derivatives, robust resolution regimes for CCPs are particularly important to ensure that greater reliance on CCPs does not result in a new category of TBTF institution,” he added. Additionally, the FSB is consulting on a set of principles for the design of national legal regimes to allow the sharing of non-public information between domestic and foreign authorities that, it says, is necessary for planning and carrying out resolution. The FSB is seeking comments on its publications by October 15. Comments of the CPSS-IOSCO paper are due by October 11. Translating climate risks into financial risks takes work How should banks allocate capital for crypto? read more