GFMA submits comment letter on Basel CCR Guidelines.

GFMA has submitted a response to the Basel Committee on Banking Supervision (BCBS) Discussion Paper on the role of climate scenario analysis (CSA).

GFMA with IIF and ISDA submitted a joint response to the BCBS G-SIB Window Dressing consultation.

GFMA joined a joint response to the BCBS proposed crypto standard amendments consult.

GFMA submits response to BCBS consult on recalibration of shocks for IRRBB.

GFMA submitted a response to the BCBS Consultative Document on Disclosure of Climate-related Financial risks.

GFMA joined a joint trade association response to the second BCBS consult on the "Prudential Treatment of Cryptoasset Exposures."

GFMA submitted a response to the International Organization of Securities Commission (IOSCO) consultation on "Corporate Bond Markets - Drivers of Liquidity During COVID-19 Induced Market Stresses."

GFMA with IIF and ISDA submitted a letter to the BCBS on SA-CCR.

GFMA joined a joint trade association response to the BCBS consultative document on the "Prudential Treatment of Cryptoasset Exposures."

GFMA submitted a response to the Basel Committee's proposed Technical Amendment to the Minimum Haircut Floors for Securities Financing Transactions ("Minimum Haircut Framework").

GFMA submits response to the FSB's Consultation Paper on Evaluation of the Effects of Too-Big-to-Fail Reforms

GFMA with IACPM, IIF, and SFA submitted a joint industry response to a BCBS Technical Amendment on Capital Treatment of Securitisations of Non-Performing Loans.

GFMA submitted a response to the BCBS discussion paper on “Designing a Prudential Treatment for Crypto-Assets.”

GFMA submitted a response letter to the FSB in regarding its consultation on evaluation of too-big-to-fail (TBTF) reforms for banks. The response outlined key achievements in addressing TBTF, the areas that warrant further analysis and the other questions that should be asked in order to complete the evaluation.

GFMA, ISDA and the IIF sent a joint letter to the Basel Committee outlining concerns on the impact of the revised Credit Valuation Adjustment (CVA) Framework. The letter notes that industry QIS indicated that the framework will result in substantial increases in capital requirements.

GFMA, the International Swaps and Derivatives Association (ISDA) the Institute of International Finance (IIF) submitted a join response to the Basel Committee on Banking Supervision’s consultation on the leverage ratio treatment of client cleared derivatives. The industry believes that in the context of a bank exposure created by a client cleared derivative transaction, the leverage ratio framework should recognize the exposure-reducing effect of initial margin, particularly as it is not used to increase the bank’s leverage.

GFMA submitted a response to the Basel Committee's  finalization of revisions to the Globally Systemically Important Bank: Revised Assessment Methodology and the Higher Loss Absorbency Requirement.

GFMA, Bank Policy Institute (BPI), and the Institute of International Finance (IIF) provide this joint trades letter in response to the request of the Financial Stability Board (FSB) to submit views on the technical implementation of the FSB’s standard on the adequacy of total loss-absorbing and recapitalization capacity for Global Systemically Important Banks (G-SIBs) in resolution the Total Loss-Absorbing Capacity (TLAC) standard.

GFMA and IIF provide comments responding to FSB’s Thematic Peer Review on Bank Resolution Planning.

GFMA, the International Swaps and Derivatives Association and the Institute of International Finance provide comments on the latest Basel Committee on Banking Supervision (BCBS) consultation paper (CP) on the Fundamental Review of the Trading Book (FRTB). 

GFMA published Principles for Achieving Consistent Regulatory Regimes and Supervisory Practices.

2018 marks ten years on from the Group of 20 (G20) response to the global financial crisis that ushered in financial regulatory reforms that have transformed global capital markets and enhanced financial stability.  To improve regulatory outcomes and deliver on the benefit of reforms, GFMA calls on global financial regulators to agree to principles to design regulatory cooperation arrangement(s) to develop consistent regulatory regimes and supervisory practices.  GFMA encourages global policymakers to establish regulatory cooperation arrangement(s) that (are): (i) Forward-looking; (ii) Enhance cross-border investment and market integrity; (iii) Supportive of similar outcomes; (iv) Predictable; (v) Transparent; (vi) Evidence-based; (vii) Proportionate; (viii) Enhance market certainty; (ix) Strengthen supervisory coordination; and (x) Supportive of conflict mitigation. 

“Now is the time for global financial regulators to design and adopt regulatory cooperation arrangements to deliver consistent regulatory regimes and supervisory practices to strengthen the foundation for strong, sustained and balanced growth leading to global job creation,” said Mark Austen, chief executive officer of GFMA and chief executive officer of ASIFMA.  “These principles aim to balance the legitimate national interests of domestic regulators and supervisors with a genuine commitment to the global common good of a safe, open and competitive global market, which has been a hallmark of the G20 reform agenda. We encourage global policymakers to adopt these principles for regulatory cooperation arrangements, which we believe will improve long-term market integrity, efficiency, liquidity, and resilience by minimizing the risk of fragmentation and the adverse effect it has on global economic growth.” 

See Full Press Release and Press Contacts here.

GFMA, ISDA and IIF letter on trading book default risk charge floor to the Sovereign Risk Task-Force

GFMA, the Institute of International Finance (IIF), and the International Swaps and Derivatives Association (ISDA) provides comments to the Basel Committee on the Basel Committee on Banking Supervision’s (BCBS) proposal on changes to the treatment of extraordinary monetary policy operations in the Net Stable Funding Ratio (NSFR).

GFMA, the Clearing House, and IIF provide comments responding to FSB’s consultation on resolution funding strategies.  

GFMA, ISDA and the IIF submitted a letter to the Basel Committee in response to its consultation on a simplified alternative to the standardized approach to market risk capital.

GFMA response to BCBS Consultative Document: Global systemically important banks - revised assessment framework.

GFMA, along with the Institute of International Finance (IIF), the International Banking Federation (IBFed), the CRE Finance Council (CREFC) and the Commercial Real Estate Finance Council Europe (CREFC Europe) provide this joint response letter on the Basel Committee on Banking Supervision (BCBS) Consultative Document "Identification and management of step-in risk".

GFMA-IIF response to the Basel Committee on Banking Supervision (BCBS) on the Discussion Paper, "Regulatory treatment of accounting provisions" and on the BCBS Consultative Document, "Regulatory treatment of accounting provisions – interim approach and transitional arrangements."

GFMA provides comments to the Chair of the Group of Governors and Heads of Supervision (GHOS) in support of appropriately calibrated global minimum standards. GFMA endorses the Committee’s objective in revising the risk-based capital framework to achieve an appropriate balance between its risk sensitivity, simplicity and comparability and welcomes the GHOS commitment that these revisions should not, in aggregate, lead to a significant increase in overall capital levels. 

GFMA, the Institute of International Finance (IIF), International Banking Federation (IBFed), and the International Swaps and Derivatives Association (ISDA) provides a joint response on behalf of the industry IRRBB Working Group on the Basel Committee on Banking Supervision (BCBS) Consultative Document on Interest Rate Risk in the Banking Book (IRRBB)

GFMA provides letter to multiple regulators accompanying a copy of a report commissioned from Oliver Wyman, which analyzes the interaction, coherence, and overall calibration of post crisis regulatory reform measures agreed upon, or under active consideration, by the Basel Committee on Banking Supervision (BCBS).  The full report is available here.

Also, see: GFMA Press Release

GFMA with Other Associations Submit Comments to the BCBS on to the Consultative Document on Revisions to the Basel III Leverage Ratio Framework.

GFMA, the International Swaps and Derivatives Association (ISDA), the International Association of Credit Portfolio Managers (IACPM) and the Japan Financial Markets Council (JFMC), provide comments to Basel Committee on Banking Supervision (BCBS) to respond to the Basel Committee’s Consultative Document “Reducing variation in credit risk-weighted assets – constraints on the use of internal model approaches”.

GFMA, the Institute of International Finance (IIF), and the International Swaps and Derivatives Association (ISDA), provide comments to Bank for international Settlements (BIS) on the second phase of the development of the revised Pillar 3. 

GFMA and the Institute of International Finance (IIF) provide comments to Basel Committee on Banking Supervision (BCBS) on the Standardised Measurement Approach (SMA) for operational risk Consultative Document.

GFMA provides comments to the Bank for International Settlements (BIS) in response to the Financial Stability Board (FSB) consultation document “Transforming Shadow Banking into resilient Market-based Finance—Possible Measures of Non-Cash collateral Re-Use” (Consultation Document).  

GFMA provides comments to Bank for International Settlements (BIS) on the Basel Proposal regarding reducing variation in credit risk-weighted assets constraints on the use of internal model approaches.

GFMA, the Institute of International Finance (IIF), the International Swaps and Derivatives Association (ISDA) and the International Association of Credit Portfolio Managers (IACPM) provide comment on the Basel Committee on Banking Supervision’s (BCBS) second proposal on revisions to the standardized approach for credit risk. The Associations would like to thank the BCBS Task Force on the Standardized Approach (TFSA) for the opportunity to raise with them in person some of the industry’s comments on the proposals at the meeting in Basel on February 17. 

GFMA, with FIA and the International Swaps and Derivatives Association (ISDA), provide comments to European Securities and Markets Authority (ESMA) on their Discussion Paper on Benchmarks Regulation.  

GFMA drafted and today submitted comments to the Basel Committee on its Step-In Risk consultation (joined by CREFC, CREFC Europe, the Real Estate Roundtable).  The Basel Committee issued this consultation to address the risk that a bank would ‘step in’ to provide voluntary, non-contractual support for a transaction (such as what banks did with SIVs or credit card ABS in the crisis).  The Basel Committee’s proposal would require a bank to examine all off-balance sheet vehicles and other relationships which are not currently capitalized and, if step-in risk indicators are there, hold capital for them as if they were on-balance sheet.  The proposal is very expansive and could require massive amounts of effective consolidation if read broadly.  GFMA/CREFC/RER’s position is that the proposal is not needed given the massive amount of regulatory change (importantly including changes to off-balance sheet accounting rules, the Volcker Rule in the US, and other regulations) that have largely addressed this problem.  We do not believe step-in risk is a material issue at this point and suggest the Basel Committee should forego implementing new rules in this area.  We also raise significant concerns with the lack of clarity and expansive breadth of the proposal.  

See also:
Identification and measurement of step-in risk - consultative document

GFMA and the International Association of Credit Portfolio Managers (IACPM) provide comments to the Basel Committee on Banking Supervision (BCBS) in response to BCBS Consultative Document on Capital treatment for "simple, transparent and comparable" securitisations.

GFMA provides comments to the Basel Committee on Banking Supervision (BCBS) in response to the Consultative Document: Haircut floors for non-centrally cleared securities financing transactions.

See:
Haircut floors for non-centrally cleared securities financing transactions - consultative document

GFMA, the International Swaps and Derivatives Association (ISDA), and the Institute of International Finance (IIF)  provide comments to the Group of Governors and Heads of Supervision (GHOS), Basel Committee on Banking Supervision (BCBS), and Bank for International Settlements to highlight key areas of the Fundamental Review of the Trading Book (FRTB) framework that require further consideration in order to ensure a balanced and more robust market risk capital framework and prevent negative impacts on the market broader economy.

The International Swaps and Derivatives Association (ISDA), the Global Financial Markets Association (GFMA) and the International Institute of Finance (IIF) set out in this document their key findings from the analysis of the results that 28 banks1 submitted to the Basel Committee on Banking Supervision’s (BCBS) Quantitative Impact Study (QIS) on the Fundamental Review of the Trading Book (FRTB) with June 2015 reference data (henceforth “QIS analysis”). The objective of this initiative was to investigate the aggregate impact of the proposed FRTB framework and to provide data-driven feedback to the policymakers for further consideration.

The Basel QIS submissions for the 28 globally / locally significant banks were combined to generate comparative metrics for an “Aggregate Bank”. The quantitative analysis was complemented by qualitative reviews, including a survey of banks’ confidence in their interpretation of the QIS instructions and of the estimates that they submitted. We believe this supplementary qualitative information provides useful context for the estimates of an industry-wide impact of the current FRTB proposals.

GFMA and the Australian Securitisation Forum (AuSF) provide comments to the SEC regarding proposed revisions to Regulation AB under the U.S. Securities Act of 1933 (Regulation AB).

The Securities and Exchange Commission is re-opening the comment period for the Asset-Backed Securities Releases (Release Nos. 33-9552; 33-9244; File No. S7-08-10).

GFMA with the Institute of International Finance (IIF) provides comments to the Financial Stability Board (FSB) in response to the FSB consultative document on cross-border recognition of resolution action and on guidance on cooperation and information sharing with host authorities of jurisdictions not represented on CMGs where a G-SIFI has a systemic presence.

GFMA, the International Swaps and Derivatives Association (ISDA) and the Institute of International Finance (IIF) provide comment to the Basel Committee on Banking Supervision (BCBS) and the Group of Governors and Heads of Supervision (GHOS) requesting that the timeline for finalizing the fundamental review of the trading book (FRTB) be reconsidered in order to assess changes to key components of the FRTB since the third consultation document. The additional time will allow adequate assessment of impact on products and markets to ensure that this is aligned with the overall public policy goals.

GFMA, the Institute of International Finance (IIF),  the International Swaps and Derivatives Association (ISDA), and the Commercial Real Estate Finance Council (CREFC) provide comment to the Basel Committee on Banking Supervision (BCBS) on their December 2014 Consultative Document,  “Capital Floors: the design of a framework based on standardized approaches.”

The Associations support the work of the Committee and specifically of the Task Force for Simplicity and Comparability (TFSC) aimed at conducting a comprehensive review of the capital framework and its overall calibration and taking stock of the multiple changes thereto in the course of the past 5 years. The Associations are equally supportive of the Committee’s goal to remove undue complexity and improve the comparability of banks’ capital requirements. The Joint Associations welcome the opportunity to contribute to the discussion on capital floors.

Related:
The December 2014 Consultative Document - Capital floors: the design of a framework based on standardised approaches - consultative document

GFMA and the Institute of International Finance (IIF) provide comments to the Financial Stability Board (FSB) on the FSB's publication of a term sheet (TS) for Total Loss Absorbing Capacity (TLAC) for Global Systemically Important Banks (G-SIBs).

GFMA with the Institute of International Finance (IIF), the International Banking Federation (IBFed), and the International Swaps and Derivatives Association (ISDA) provide comments to the Basel Committee’s Task Force on Interest Rate Risk (TFIR) with the industry’s comments on the templates for the interest rate risk in the banking book (IRRBB) / credit spread risk in the banking book (CSRBB) quantitative impact study (QIS).

GFMA, the Institute of International Finance (IIF), and the International Swaps and Derivatives Association (ISDA) provided comments to the Basel Committee for Banking Supervision (BCBS) on the Basel Committee’s consultation on standards for the future Pillar 3 disclosure regime.

 GFMA, the Institute of International Finance (IIF), and other associations submitted a supplemental comment letter to the Basel Committee on Banking Supervision (BCBS) to emphasize serious concerns with the treatment of equities under the BCBS’s consultative document on the revised Net Stable Funding Ratio (Revised NSFR), and the impact such treatment will have on the market and market participants. 

Prior to the supplemental comments, the trade associations submitted a comment letter to the BCBS on April 11 in response to the BCBS’s Revised NSFR. The groups continue to continue to strongly support the comments raised in the prior letter, including the equities-related comments. Therefore, none of the points outlined in the supplemental letter should be construed to supersede or override any of our original requested alternative treatments for equities or non-equities instruments.

 Related Material

Prior Comment Letter: GFMA Submits Comments to the BCBS for the Consultative Document on Basel III and the Net Stable Funding Ratio (April 11, 2014)

BCBS, Basel III: The Net Stable Funding Ratio (January 2014)

GFMA and other associations provides further information to the Basel Committee for Banking Supervision (BCBS or the Committee) for BCBS to consider as they move toward completing work on the proposals set out in the second consultative document, "Revisions to the Basel securitisation framework."

The groups remain concerned that the current proposals will not meet the Committee's stated objective of comparability, resulting instead in capital requirements that are neither comparable among calculation methods nor proportionate to risks.

It is essential that the timetable for finalisation of the proposed framework is extended to address those shortcomings. Additional work should be undertaken to refine the calibration of the proposed framework and especially to improve the consistency of results between the internal ratings-based approach (IRBA), the external ratings-based approach (ERBA) and the standardised approach (SA). This should include gathering additional, more granular data and undertaking further analysis beyond what was provided in the QIS. In particular, we would recommend conducting analysis of data grouped by the market-defined asset classes of the underlying exposures (rather than according to the regulatory exposure categories). Further consideration should also be given to additional analytical work provided by the industry and referred to in the Joint Associations' comment letter dated 24 March 2014 (Comment Letter).

RCL has conducted an analytical study of certain data provided by a number of GFMA's member banks. These data are limited as explained in the Report, and the Report should be read and understood in that context. It is especially important to note that the Report does not advocate or support a particular calibration method or outcome, and in particular we do not intend that any of the implied p-values set out in the report should be used to calibrate the revised framework. Rather, the Report reveals a number of results that we respectfully ask the Committee to consider as they continue to work on the proposed revisions.

Related Material

RCL Report: Quantitative Impacts of BCBS 269 Securitisation Capital Approaches (August 8, 2014)

BCBS 269: "Revisions to the Basel securitisation framework" (December 21, 2013)

GFMA and Other Associations Submit Comments to the BCBS on the BSBC's Second Consultative Document on the Basel Securitisation Framework (March 24, 2014)

GFMA and the Financial Industry Association (FIA) respond to the Agency for the Cooperation of the Energy Regulators (ACER) on ACER's Consultation: Draft Trade Reporting User Manual (TRUM) for trade reporting under The Regulation on Energy Market Integrity and Transparency (REMIT).  

In addition to addressing the specific questions in the consultation, the groups take the opportunity to raise some high level points that we feel are important in the wider context of the reporting regime under REMIT.

GFMA, the Institute of International Finance (IIF) the International Swaps and Derivatives Association, Inc (ISDA) provide comments to the Basel Committee on Banking Supervision (BCBS) on the revised Standardized Approach for Market Risk.

The industry believes that the Sensitivity Based Approach (SBA), as put forward by the BCBS, constitutes a significant improvement to the previous version of the methodology and is in line with industry recommendations on leveraging upon existing validated risk metrics to calculate the market risk capital requirements.

The Advanced Cash Flow Approach (ACFA) methodology, on the other hand, is not computationally supported by existing infrastructure, since cash flow data are not captured at the trade level. As a result, industry members would require extensive resources to adhere to currently proposed regulatory timelines whilst achieving little in terms of enhancing the risk sensitivity of output metrics. This would be particularly onerous for smaller organizations.

GFMA provides comments to the Basel Committee on Banking Supervision (BCBS) on proposals set out in the Consultative Document Basel III: the Net Stable Funding Ratio (NSFR) published by the BCBS on 11th January 2014 (Consultation Paper).

This letter sets out GFMA’s detailed points on securitisation only, and is intended to supplement the broader letter of even date submitted by the Institute of International Finance (IIF), the GFMA and others.

GFMA agrees with the BCBS that securitisation, prudently deployed and sensibly regulated, can make a very positive contribution to a bank’s overall liquidity management. GFMA requests that the Committee engage in a similar way with the industry in this, relatively new, context of the NSFR in order to achieve a treatment of high quality securitisation that accurately recognises its strong credit performance through and since the financial crisis as well as its benefits as a self-liquidating funding tool for the real economy.

GFMA Chief Executive Simon Lewis writes to the editors of the Financial Times calling for G20 finance ministers and financial heads of all nations to formally endorse the robust application of the international principle of comity – where the home regulator defers to the host regulator where the latter’s rules are consistent with the G20 recommendations and best practices.

GFMA and other associations provide a response to the Basel Committee for Banking Supervision (BSBC) on the BCBS' second consultative document, Revisions to the Basel Securitisation Framework (published 21 December 2013).The groups welcome the development of a simpler and more straightforward hierarchy of approaches, some reduction of risk weights for higher credit quality exposures, including reduction of the risk weight floor, recognition of credit protection provided by excess spread, preservation of existing flexibility in application of the Internal Ratings-Based Approach (IRBA), preservation of the Internal Assessments Approach (IAA), and requiring one rather than two qualifying credit ratings for application of the External Ratings-Based Approach (ERBA).

However, the groups believe that the proposed capital requirements for securitisation exposures, especially for higher quality exposures and for medium-term and longer-maturity transactions, remain much higher than justified by historical loss incidence in most asset classes, by comparison with other methods of finance or in relation to the capital requirements of the underlying asset pools. These excessive capital requirements will discourage banks from investing in or otherwise acquiring exposure to securitisation transactions. The groups recommend specific changes to certain of the modelling assumptions and parameters used in formulating and calibrating the approaches, as well as changes to the operating conditions for certain approaches and to the risk weight floor and capital cap provisions.

GFMA signed the letter with the follow groups: The Commercial Real Estate Finance Council (CREFC), the Commercial Real Estate Finance Council Europe (CREFC Europe), the Institute of International Finance (IIF), the International Association of Credit Portfolio Managers (IACPM), the International Swaps and Derivatives Association, Inc (ISDA), the Securitisation Forum of Japan (SFJ), and the Structured Finance Industry Group (SFIG).

GFMA and other associations provide comments to the Basel Committee on Banking Supervision (BCBS) requesting clarification on how the final leverage ratio framework rules should be interpreted at this stage, so as  to ensure that they are transposed correctly and consistently in national and regional implementation measures, without unintentional adverse impacts on the markets.

GFMA signed the letter with the following groups:  American Bankers Association (ABA), Futures Industry Association (FIA), Institute of International Finance (IIF), International Swaps and Derivatives Association, Inc. (ISDA), The Financial Services Roundtable (FSR),  and The Clearing House (TCH).

GFMA provides comments to the International Organization of Securities Commissions (IOSCO) offering recommendations on foundational principles for global coordination in cross-border regulation. IOSCO is creating a task force aimed at addressing cross-border regulatory coordination issues (the Task Force).

GFMA is supportive of the Task Force’s stated intention of issuing a public consultation paper focused on cross-border reform efforts and hosting public industry meetings for continued dialogue; and believes IOSCO can and should play an integral role in promoting coordination. Consequently, in advance of the Task Force’s consultation paper, GFMA writes to highlight several issues currently impacting cross-border regulatory coordination, which it believes are immediately actionable by IOSCO.

GFMA provides comments to all G20 Finance Ministers in Support of Global, Consistent Standards and Meaningful Regulatory Reform. This letter addresses important developments related to implementation and global consistency of the G20s regulatory reform agenda which may risk divergence from consistent implemention.

GFMA, SIFMA, The Clearing House Association L.L.C. (The Clearing House), the American Bankers Association, the Financial Services Roundtable and the Global Financial Markets Association provided comments to the Federal Deposit Insurance Corporation on their notice entitled Resolution of Systemically Important Financial Institutions: The Single Point of Entry Strategy.

The Notice describes the FDIC’s single-point-of-entry (SPOE) recapitalization within resolution strategy for resolving global systemically important banking groups (G-SIBs) with top-tier U.S. parent companies under Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act and requests comments on certain details and issues regarding how the FDIC would expect to carry out the SPOE Strategy with respect to U.S. G-SIBs.

See also:

78 FR 76614 - RESOLUTION OF SYSTEMICALLY IMPORTANT FINANCIAL INSTITUTIONS: THE SINGLE POINT OF ENTRY STRATEGY

GFMA, the International Institute of Finance (IIF) and the International Swaps and Derivatives Association, Inc. (ISDA) provide further response to the Basel Committee on Banking Supervision (BCBS) relating to notional definitions for the BCBS Consultative Document, The Non-Internal Model Method for Capitalizing Counterparty Credit Risk Exposures.

The groups believe the Consulative Document is a significant step in the right direction and believe that the proposed non-internal model method (NIMM) framework has great potential. As an alternative to the current exposure method (CEM), it is clear that NIMM performs significantly better as a measure of exposure.

However, the industry feels an articulation of supervisory standards for the definition of effective notional that will allow firms to reliably and consistently apply NIMM to the vast majority of derivative structures is important. We urge the Basel Committee to articulate these standards to help ensure global consistency and a level playing field, facilitating an effective application of NIMM.

GFMA, the Institute of International Finance (IIF), The Clearing House Association L.L.C. (TCH), and the Federation of Finnish Financial Services (FFI) provide comments to the Financial Stability Board (FSB) on the FSB Common Data Template Workshop held 2-3 October 2013, which focused on Phases 2 and 3 of the FSB G-SIB Common Data Template (CDT), organized by the FSB Data Requirements Workstream (DRW).

This letter starts with a reiteration of the major themes the industry raised at the workshop, followed by detailed discussions of our comments on the Phases 2 and 3 templates.

GFMA, the International Swaps and Derivatives Association, Inc. (ISDA) and the International Institute of Finance (IIF) provide comments to the Basel Committee on Bank Supervision (BCBS) responding to the BCBS Consultative Documents: Capital Treatment of Bank Exposures to Central Counterparties (CCPs), BCBS253.  

The Associations commend the BCBS for undertaking another consultation on these proposals and desire to provide meaningful input to ensure a viable capital framework is adopted. This response focuses on elements of the consultative document that stand to motivate and influence the expansion of central clearing. The groups share concerns that the proposal discourages propagation of central clearing, in direct contrast to policy objectives stated at the G20 September 2009 summit and related regulatory initiatives such as the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and European Market Infrastructure Regulation (EMIR). They also believe the proposal fails to provide incentives for CCPs to invest in the improvement of their risk systems and methodologies and discourages fundamental CCP risk practices, notably the intended function of the default fund.

GFMA provides comments to the Financial Stability Board (FSB) responding to the FSB Consultation Document: Application of the Key Attributes of Effective Resolution Regimes to Non-Bank Financial Institutions (Discussion Paper).  

GFMA summarises the key concerns and comments raised by GFMA members with respect to Appendix III of the Discussion Paper entitled “Client asset protection in resolution.”  Specifically, GFMA's comments focus on the definition of client assets and on client asset segregation rather than on resolution tools outlined in the Discussion Paper.

GFMA, the International Institute of Finance (IIF), the International Swaps and Derivatives Association, Inc. (ISDA), and The Clearing House (TCH) provide comments to the Financial Stability Board (FSB),  the Committee on Payment and Settlement Systems (CPSS) of the Bank for International Settlements (BIS), and the International Organization for Securities Commissioners (IOSCO) on the FSB Consultation Document: Application of the Key Attributes of Effective Resolution Regimes to Non-Bank Financial Institutions and the CPSS-IOSCO Consultative Report: Recovery of Financial Market Infrastructures (FMIs). 

Effective recovery, continuity and resolution mechanisms for FMIs are critical to the efficient operation and sustainability of the financial markets. It would be difficult, if not impossible, to maintain financial stability if essential services provided by FMI entities were to cease.

GFMA provides comments to the Basel Committee on Banking Supervision (BCBS)  on the Discussion Paper: The Regulatory Framework: Balancing Risk Sensitivity, Simplicity and Comparability.

The Discussion paper steps back from the significant regulatory reforms introduced by the Basel Committee and member jurisdictions to consider the resulting complexity in capital adequacy requirements as well as the comparability of capital adequacy ratios across jurisdictions.  The Discussion paper raises important questions about the capital adequacy framework (the Framework) including: whether reliance on risk‐based capital at the core of the Framework appropriately balances varied objectives and the extent to which the framework strikes the right balance between simplicity, comparability, and risk sensitivity.

GFMA believes that while the risk‐based capital framework is not perfect, all elements of it are sound and reflect years of study, practice, and enhancement. Further, GFMA agrees with the Basel Committee that the risk‐based capital framework must continue to evolve, and be updated frequently, to be consistent with changing markets, products, and institutions, and as understanding about how to better reflect risk in regulatory capital improves.

GFMA provides comments to the Financial Stability Board (FSB) in response to the FSB's Consultative Document:Information sharing for resolution purposes, 12 August 2013.

GFMA is strongly supportive of the work of the FSB towards establishing an effective cross-border recovery and resolution framework and the Key Attributes of Effective Resolution Regimes for Financial Institutions. Cross-border cooperation is a crucial requirement for effective cross-border resolution and GFMA strongly supports efforts to strengthen and facilitate greater cross-border cooperation in this area.  In that context, GFMA shares its expertise in response to the Consultative Document.

GFMA and the Institute of International Finance (IIF) provide comments to the Co-Chairs of the Basel Committee on Banking Supervision (BCBS) Working Group on Liquidity in response to the Consultative Document on "Liquidity coverage ratio disclosure standards".

GFMA and other Associations provide comments to the Basel Committee on Bank Supervision (BCBS) responding to the June 2013 Consultative Document issued by the BCBS , Revised Basel III leverage ratio framework and disclosure requirements (Proposed Framework).  

The Associations support the BCBS’s efforts to impose a leverage ratio as a supplemental, backstop measure to the risk-based measure.  In its current form, however, the Proposed Framework would greatly increase the denominator of the Basel III leverage ratio (the Exposure Measure) by adopting measurement methodologies that the Associations believe would significantly overstate actual economic exposure.  If adopted in this form, the Exposure Measure is far more likely to result in the leverage ratio, rather than the risk-based capital ratio, becoming the binding capital measure for a substantial number of banks.  Moreover, for banks where the leverage ratio does not become the binding ratio immediately, the very real prospect of it becoming binding in the future or after a stress test will cause these institutions to change their behavior as if it were binding. As a result, institutions will reduce their participation in core financial activities and markets that are critical to the smooth functioning of the financial system.

GFMA provides comments to the Basel Committee on Bank Supervision (BCBS) on the recognition of short positions in the calculation of capital deductions required for investments in unconsolidated financial institutions, as required under Basel III.  GFMA believes that the current Basel III wording will unintentionally restrict banks' ability to provide liquidity and carry out market making activities, and therefore ask the BCBS to reconsider the requirement.

 GFMA, the Clearing House Association L.L.C., the American Bankers Association (ABA), the Financial Services Roundtable (FSR), International Swaps and Derivatives Association, Inc. (ISDA), and the Structured Finance Industry Group (SFIG) provide comments to Secretariat of the Basel Committee on Banking Supervision (BCBS) on their March 2013 Consultative Document, Supervisory framework for measuring and controlling large exposures.

GFMA provides comments to the Financial Stability Board (FSB) and the Basel Committee on Bank Supervision (BCBS) on the implementation of prudential standards.  The post‐crisis international regulatory framework represents a major step forward from that which existed prior to the financial crisis.  GFMA shares concerns that as the implementation phase begins for many of these regulatory reform initiatives, however, instances of divergence from agreed frameworks have increased. Some jurisdictions have also adopted or are considering additional reforms beyond international consensus (e.g., structural banking reforms). Inconsistent prudential standards, including variations in supervisory practices, and a trend toward regulatory fragmentation could increase regulatory arbitrage, undercut efforts to develop a credible cross‐border resolution regime, and undermine international cooperation on policymaking.

GFMA and the International Swaps and Derivatives Conference, Inc. (ISDA) provides comments to the Basel Committee for Banking Supervision (BCBS) in response to the BCBS Consultation Document, Recognising cost of credit protection purchased (published 22 March 2013).  The groups are concerned that, while capturing a small number of transactions deemed abusive by the regulators, the proposed rule would have a disproportionate effect on a wide range of banks' financing activities (both in corporate and investment banking), wherever banks seek to hedge borrower credit risk or associated counterparty risk. In addition the groups voice concerns about synthetic securitisation transactions, non-securitisation transactions, the potential impact of changes to the accounting standards affecting loan loss reserves, and additional questions posed in the BCBS Consultation Document.

GFMA and ISDA provide comments to the Basel Committee for Bank Supervision (BCBS) responding to the BCBS Consultative Document, Recognising Cost of Credit Protection Purchased.

The groups share multiple concerns, including that, while capturing a small number of transactions deemed abusive by the regulators, the proposed rule would have a disproportionate effect on a wide range of banks' financing activities (both in corporate and investment banking), wherever banks seek to hedge borrower credit risk or associated counterparty risk. Also they believe the Committee's concern can and should be addressed by regulatory supervision, and may also be partly addressed by proposed changes to relevant accounting standards, without amendments to existing Pillar 1 capital rules.

GFMA, the International Swaps and Derivatives Association (ISDA), and the Institute of International Finance (IIF) provides further response to the Basel Committee on Banking Supervision (BCBS) on Consultative Document:  Fundamental Review of the Trading Book dated May 2012 (Fundamental Review or FRTB). The groups recommend reading this further response should be read in the context of the previous industry response submitted in September 2012.  

Under current BCBS Trading Book Group (TBG) proposals, the organizations feel that the ideas for standard rules may be overly prescriptive and complex because they attempt to achieve too many goals, many of which we feel may be better addressed by considering use of a standardized calibration of internal models for the purpose of benchmarking models and making cross firm comparisons. While the groups would be happy to engage further with the TBG on a recalibration of the existing standard rules approach, or indeed on the design of a new simple standard rules approach, the focus of this response is on standardization of model calibration for benchmarking purposes.

GFMA provides comments to the U.S. Board of Governors of the Federal Reserve System on a proposed rule, Enhanced Prudential Standards and Early Remediation Requirements for Foreign Banking Organizations (FBOs) and Foreign Nonbank Financial Companies; Docket No. R−1438; RIN 7100 AD 86.

GFMA recognizes that the profile of the U.S. operations of some FBOs has changed substantially in recent years and understands the Federal Reserve’s concerns about the financial stability risks that global financial institutions can pose to host country financial systems.  However, GFMA believes that the proposed rule will exacerbate, rather than mitigate, these financial stability risks and harm the global economy.

GFMA, the International Swaps and Derivatives Association, Inc. (ISDA) and the Institute of International Finance provide a further response to the Basel Committee on Banking Supervision (BCBS) on the Consultative Document:  Fundamental Review of the Trading Book dated May 2012. This paper follows the earlier paper on Diversification and Model Approval. It addresses the calibration of the two parameters presented in the previous paper; Alpha which governs diversification benefit and Beta which controls the penalty for poor model performance. The groups also submit a short paper on the use of the Kalman Filter. 

GFMA provides comments to the Basel Committee for Banking Supervision (BCBS) requesting an extension of the comment due date of the Consultative Document on Revisions to the Basel Securitisation Framework.  GFMA appreciates the efforts of the the BCBS and its working group that produced the technical paper (the Technical Paper) and a proposed quantitative impact study (the QIS) in connection with the consultative document.  However, given the short period of time from the issuance of the Technical Paper and the QIS, and the meeting thereon, until March 15, 2013, when the comment period on the Consultative Document is due to expire, GFMA members are concerned that there is not sufficient time remaining before the Comment Due Date to adequately evaluate and comment on the Consultative Document.

GFMA provides comments to the Basel Committee for Banking Supervision (BCBS) on the Consultative Document, Revisions to the Basel Securitisation Framework published by the BCBS on 18 December 2012.  GFMA believes the starting assumptions of the Consultative Document are too narrowly drawn. The group notes that outside certain well-known and defined sectors, securitisations have performed well since the financial crisis. GFMA calls for a balanced, prudently calibrated and holistic policy response.

GFMA paper provided to the Basel Trading Book Group (TBG)in response to the BCBS consultative document: Fundamental Review of the Trading Book. 

The paper addresses the issues of diversification and model approval; te paper attempts to assist the Basel Committee in achieving their aims of having a more granular model approval framework.

GFMA provides comments to the Financial Stability Board (FSB) on the Consultative Document, Recovery and Resolution Planning: Making the Key Attributes Requirements Operational.
GFMA strongly agrees with the objective of the Consultative Document, and appeciates the FSB’s efforts to monitor and assess how well the Key Attributes are being complied with across jurisdictions.  In addition, GFMA believes that progress on orderly resolution regimes should reduce the amount of any applicable G-SIFI surcharge. If a G-SIFI is resolvable, then the need for a surcharge premised on the lack of resolvability is substantially decreased and therefore any surcharge should be commensurably reduced.

GFMA and the International Swaps and Derivatives Association, Inc. (ISDA) provide comments to the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (collectively “CPSS-IOSCO”) and requests clarification on aspects of the interim framework for the capitalisation of bank exposures to central counterparties. The groups believe that clarifying the issues noted will contribute to timely and efficient local implementation of BCBS 227 of July 2012.

GFMA provides comments to the Committee on Payment and Settlement Systems (CPSS) and the Technical Committee of the International Organization of Securities Commissions (IOSCO) in response to the Recovery and Resolution Consultative Report.

GFMA, the Institute of International Finance (IIF), the International Banking Federation (IBFed), and The Clearing House Association L.L.C. (TCH) submit comments to the Basel Committee on Bank Supervision (BCBS) on the BCBS's consultative document on Principles for Effective Risk Data Aggregation and Risk Reporting.  The groups applaud the collaborative approach between the offical and private sectors, and offer additional views and comments on the consultative document.

GFMA provides comments to the Secretariat of the Basel Committee on Banking Supervision (BCBS) on their consultative document regarding monitoring indicators for intraday liquidity management. GFMA supports the BCBS’s ongoing efforts to promote enhanced intraday liquidity risk management practices and supervisory tools originally outlined in Principal 8 of the BCBS’s Principles for Sound Liquidity Risk Management and Supervision (September 2008).
 

GFMA, the International Swaps and Derivatives Association, Inc. (ISDA) the Institute of International Finance (IIF) and the International Banking Federation (IBFed) provide comments to the Basel Committee on Banking Supervision (BCBS) Consultative Document: Fundamental Review of the Trading Book dated May 2012.  The Associations offer this first set of responses, and look forward to an ongoing productive dialogue, while continuing to support the BCBS in its efforts to strengthen and improve the regulatory treatment of the Trading Book.

On May 23, 2013, GFMA, the International Swaps and Derivatives Association, Inc. (ISDA), and the Institute of International Finance (IIF) provide further response to the Consultative Document.

GFMA provides comments to the Commodity Futures Trading Commission (CFTC) on the Proposed Interpretive Guidance on the Cross-Border Application of Certain Swaps Provisions of the Commodity Exchange Act (RIN 3038–AD57) and the Proposed Exemptive Order Regarding Compliance with Certain Swap Regulations (RIN 3038–AD85).

GFMA provides comments to the Secretariat of the Basel Committee on Banking Supervision on the recent consultative paper, A framework for dealing with domestic systemically important banks (the D-SIB framework). 

GFMA and the Institute for International Finance (IIF) provide comments to the Finacial Stability Board (FSB) on the G-SIB Common Data Template (CDT) proposal.  The groups encourage the FSB to:

• Formally adopt principles that should guide information collection
• Form an industry advisory group to facilitate dialogue with the industry on the development of the data template
• Launch the common data template using an observation period
• Clarify and consult on the governance arrangements regarding use and confidentiality of the data
• Consider forming a permanent supervisory reporting board to oversee international data initiatives

GFMA provides comments to the Secretariat of the Basel Committee on Banking Supervision (BCBS) on the consultative document:  Principles for the supervision of financial conglomerates.  GFMA supports the development of consistent and effective supervision of global financial firms, and welcomes the work of the Joint Forum on strengthening the supervision of financial conglomerates (FCs).

GFMA provides comments to the Risk Management Group (RMG) of the Bank for International Settlements (BIS) on the Basel CCP framework filed regarding Capitalisation of Default Fund Exposures and Hypothetical Capital Methodologies 
 

GFMA provides comments to the Basel Committee on Banking Supervision (BCBS) on proposed Pillar 3 disclosure requirements for remuneration. GFMA believes in the disclosure of compensation information to supervisors and public disclosure of certain qualitative information to the public to the extent that it enhances prudent risk management.

Related Item: SIFMA Comments to the Basel Committee on Banking Supervision on Pillar 3 Disclosure Requirements for Remuneration 

GFMA with their European affiliate, the Association for Financial Markets in Europe (AFME),  authored a briefing note on Global Systemically Important Financial Institutions.

Introduction 

Global Systemically Important Financial Institutions, or G-SIFIs, have become an area of focus for international policymakers.  The G20 is driving the development of a new regulatory framework at a political level and has tasked various agencies with creating more detailed approaches.  The concern of policymakers is that G-SIFIs are too-big-to-fail, potentially forcing taxpayers to bear the costs of any failures.           

The policy framework for banks classified as G-SIFIs (known as Global Systemically Important Banks, or G-SIBs) has been developed more quickly than for other parts of the financial sector.  The initial list of G-SIBs has been published (see box below) using a methodology developed by the Basel Committee (BCBS).  These banks face new capital requirements and are required to develop resolution plans, while the Financial Stability Board (FSB) has consulted on an enhanced data template for G-SIBs.

While the Global Financial Market Association (GFMA), of which AFME is a member, strongly supports the goal of the Basel Committee to promote financial stability, GFMA has a number of concerns with the proposed G-SIB capital buffers including: whether the benefits exceed the cost of reduced economic growth, the lack of clear and well-defined offsets against the capital buffers for improved resolution regimes, and transparency and methodological issues.

GFMA provides comments to the Secretariat of the Basel Committee on Banking Supervision (BCBS) in response to the Consultative Document: Definition of capital disclosure requirements, 19 December 2011. 

GFMA believes the BCBS focus on post-2018 capital disclosures, taking more time to agree on the specific modalities of that disclosure, and not implement the transitional template. GFMA makes this suggestion for reasons including:

• The value of the transitional templates are compromised by the uneven pace of implementation of rules governing Basel III, as well as revisions to and uncertainties about risk-weighted asset calculations.
• It is difficult to evaluate the impact of this proposal without understanding the bigger picture of upcoming Pillar 3 revisions, as well as additional reporting and disclosure that will result from other international policy initiatives.
• This proposal, as with any other reporting and disclosure proposals, should be subject to a cost/benefit review. One step that clearly reduces costs and enhances benefits is to ensure data definitions are harmonized where possible, within and across templates.

GFMA provides comments to U.S. Treasury Secretary Geithner and E.U. Commissioner Barnier regarding extraterritorial legislation. 

The letter is sent in advance of Commissioner Barnier’s trip to the U.S. The letter aims to draw attention to the numerous extraterritorial issues, both new and previously raised, that risk negatively affecting members and their clients.
 

The Global Foreign Exchange Division (GFXD) welcomes the opportunity to comment on the Hong Kong Monetary Authority (HKMA) consultation regarding the Hong Kong Trade Repository (HKTR). On behalf of its members, the GFXD would like to take the opportunity to comment on a number of issues around the implementation of a trade repository for foreign exchange transactions and to continue our recent discussions with you in more detail with the aim of aligning and coordinating development work as closely as possible to the benefit of both regulators and industry.

 GFMA provides comments to the Bank for International Settlements (BIS)and the International Organization of Securities Commissions (IOSCO) on the March 2011 Committee on Payment and Settlement Systems and the Technical Committee of the International Organization of Securities Commissions consultative report on principles for financial market infrastructures.

This discussion note focuses on the proposals under consideration by the FSB and the Basel Committee on Banking Supervision (BCBS) relating to the establishment of additional loss absorbing capacity for SIBs.

GFMA provides comments to the Secretariat of the Basel Committee on the July 19, 2011 consultative document: “Global Systemically Important Banks: Assessment Methodology and the Additional Loss Absorbency Requirement."

The Global Financial Markets Association (GFMA), The Clearing House Association (TCH), the American Bankers Association (ABA), The Financial Services Roundtable (FSR), the Institute of International Bankers (IIB), and the Institute of International Finance (IIF) collectively, welcome the opportunity to comment on the Consultative Document on Effective Resolution of Systemically Important Financial Institutions published by the Financial Stability Board (FSB) on July 19, 2011 (Consultative Document).

The groups strongly agree with the overall objective of the Consultative Document – that authorities in all relevant jurisdictions should have the capacity to resolve systemically important financial institutions (“SIFIs”) without systemic disruption and without exposing the taxpayer to the risk of loss, within a reasonable timeframe. Taxpayer-funded bailouts have been chosen in the past, including during the recent global financial discrimination will be an impediment to cross-border resolutions of G-SIFIs. Instead, foreign and domestic deposits, and foreign and domestic depositors, should be treated as a single class in any depositor preference law.

GFMA, American Bankers Association (ABA), The Clearing House, and the Financial Services Roundtable provide comments to the Financial Stability Board on the Consultative Document: Understanding Financial Linkages: A Common Data Template for Global Systemically Important Banks, 6 October 2011.

The British Bankers’ Association, the Futures and Options Association, the Global Financial Markets Association (GFMA), the Institute of International Finance and the International Swaps and Derivatives Association, Inc.(ISDA) provide comments to the Secretariat of the Basel Committee on Banking Supervision Bank for International Settlements in response to the BCBS’ consultative document: Capitalisation of bank exposures to CCPs.

GFMA and 7 other Associations provide comments to EU Commissioner, Michel Barnier, and Treasury Secretary, Geithner, in relation to extraterritoriality in international regulators’ work on derivatives business.

This is a joint letter on extra‐territorial effects in EU and US regulation of derivatives with International Swaps and Derivatives Association (ISDA), European Banking Federation (EBF), Alternative Investment Management Association (AIMA), Futures and Options Association (FOA), Investment Management Association (IMA), and Wholesale Market Brokers’ Association (WMBA) and London Energy Brokers’ Association (LEBA).