Review on November 30th 2017 FSB Funding Strategy Elements of an Implementable Resolution Plan Consultative Document
Background:
August 18th 2016, FSB published the Guiding Principles on the temporary funding needed to support the orderly resolution of a global systemically important bank, to assist authorities in their resolution planning work. This report provides additional guidance for the development of an implementable resolution funding plan and identifies a set of key funding strategy elements.
Summary:
Key funding strategy elements proposed by FSB:
Strategy for maintaining liquidity in resolution
i) Assess whether the overall strategy for ensuring adequate liquidity in resolution is feasible and consistent with overall resolution strategy.
Firm capabilities to support monitoring, reporting and estimating funding needs in resolution
ii) Capabilities to measure sources and positioning of liquidity and any impediments or actions taken to improve the firm's capabilities.
iii) Capabilities to report liquidity information on a timely basis.
iv) Capabilities to identify and rapidly mobilizes assets (cross-border intra-group).
Development of the resolution funding plan by the authorities
v) Interaction of measures with firm's contingency funding plan and recovery plan.
vi) Relevant regulators' approach to assessing liquidity stress.
vii) The home regulator's framework for estimating funding needs in resolution.
viii) Whether assumptions and liquidity stress scenarios are appropriate.
ix) The strategy and actions to acquire funding in the needed foreign currency for the G-SIB.
Firm assets and private sources of resolution funding
x) Availability of firm assets in different scenarios.
xi) Availability and size of private sources of funding.
xii) How regulators can increase the willingness of private counterparties to provide funding.
Temporary public sector backstop funding mechanisms and ordinary central bank facilities
xiii) Conditions and procedures to access public backstop funds and how to ensure same day access to public sector backstop funds.
xiv) The alignment of public sector backstop fund and resolution strategy.
xv) The preferred sequencing, and expected contribution, of temporary public sector backstop funds.
xvi) Whether all material operating entities have access to central bank facilities, as well as payment and settlement systems.
Information sharing and coordination between authorities
xvii) Clear relationship among home and host regulators with regards to allocation of responsibilities (funding, communication).
xviii) Requirements of local regulators and how funding will be distributed.
xix) How to address any impediments to coordination among relevant regulators.
Comments:
This consultation document outlined general areas of focus and improvement for liquidity risk management in resolution. More information and adjustments are expected after responses to this document.
August 18th 2016, FSB published the Guiding Principles on the temporary funding needed to support the orderly resolution of a global systemically important bank, to assist authorities in their resolution planning work. This report provides additional guidance for the development of an implementable resolution funding plan and identifies a set of key funding strategy elements.
Summary:
Key funding strategy elements proposed by FSB:
Strategy for maintaining liquidity in resolution
i) Assess whether the overall strategy for ensuring adequate liquidity in resolution is feasible and consistent with overall resolution strategy.
Firm capabilities to support monitoring, reporting and estimating funding needs in resolution
ii) Capabilities to measure sources and positioning of liquidity and any impediments or actions taken to improve the firm's capabilities.
iii) Capabilities to report liquidity information on a timely basis.
iv) Capabilities to identify and rapidly mobilizes assets (cross-border intra-group).
Development of the resolution funding plan by the authorities
v) Interaction of measures with firm's contingency funding plan and recovery plan.
vi) Relevant regulators' approach to assessing liquidity stress.
vii) The home regulator's framework for estimating funding needs in resolution.
viii) Whether assumptions and liquidity stress scenarios are appropriate.
ix) The strategy and actions to acquire funding in the needed foreign currency for the G-SIB.
Firm assets and private sources of resolution funding
x) Availability of firm assets in different scenarios.
xi) Availability and size of private sources of funding.
xii) How regulators can increase the willingness of private counterparties to provide funding.
Temporary public sector backstop funding mechanisms and ordinary central bank facilities
xiii) Conditions and procedures to access public backstop funds and how to ensure same day access to public sector backstop funds.
xiv) The alignment of public sector backstop fund and resolution strategy.
xv) The preferred sequencing, and expected contribution, of temporary public sector backstop funds.
xvi) Whether all material operating entities have access to central bank facilities, as well as payment and settlement systems.
Information sharing and coordination between authorities
xvii) Clear relationship among home and host regulators with regards to allocation of responsibilities (funding, communication).
xviii) Requirements of local regulators and how funding will be distributed.
xix) How to address any impediments to coordination among relevant regulators.
Comments:
This consultation document outlined general areas of focus and improvement for liquidity risk management in resolution. More information and adjustments are expected after responses to this document.
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