Vulnerabilities affecting the financial system and major initiatives to strengthen the resiliency of the financial system- FSB

Key financial regulatory reforms

Commodity markets. The FSB discussed developments in commodities markets and related regulatory issues. It welcomed the ongoing work of IOSCO on Commodity Futures Markets. Reforms to commodity derivatives markets are an important part of overall OTC derivatives reforms. The FSB will consider next steps in this area in the light of IOSCO’s final report on commodity financial markets in September 2011.

Shadow banking. The FSB approved the proposed approach by its task force to develop recommendations to strengthen the regulation and oversight of the shadow banking system. The FSB will consider initial draft recommendations at its next Plenary meeting in July and thereafter the recommendations for submission to the G20 in the autumn. The FSB will publish later this month a short background note on this work project.

Data gaps. The FSB approved proposals to progress work on a consistent template for improving the collection, and sharing among relevant authorities, of data on systemically important financial institutions. A consultation process will be undertaken to provide additional information on the legal aspects, as well as costs and benefits of alternative options. This will guide the decision on the final form and phased implementation of the common template. Preparatory work will also commence on strengthening data sharing arrangements and protocols within the official sector.



Compensation. The FSB finalised the terms of reference for its second thematic peer review of compensation practices. This second thorough peer review will assess the progress made by national authorities and significant financial institutions in implementing the FSB Principles for Sound Compensation Practices and their Implementation Standards, as well as the impact on compensation practices at financial institutions of national policy measures taken to implement the Principles and Standards. The peer review report will be published by the G20 Summit. Implementation monitoring. The FSB closely monitors implementation of internationally agreed policies to enhance financial stability, to ensure that it takes place in a full and consistent manner. In this regard, the FSB published on 1 April detailed information on national implementation of the FSB’s and the G20’s recommendations for financial regulatory reform.

International cooperation and information exchange initiative. The FSB reviewed the status of evaluations underway and agreed on the next steps in the initiative. It will publish later in April a brief report summarising progress to date.

Regional consultative groups

The FSB discussed the operational framework for six FSB regional consultative groups, rolling out its initiative announced on 3 November 2010. The groups will cover the Americas, Asia, the Commonwealth of Independent States, Europe, Middle East & North Africa, and Sub-Saharan Africa. The regional groups will bring together FSB members and over 60 jurisdictions outside the FSB’s membership, providing the opportunity to discuss the vulnerabilities affecting the regional and global financial systems, policy initiatives underway and planned to promote financial stability, and the implementation of these initiatives. The first meetings of the regional groups will take place later this year.

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