Issue no. 22: ICMA Regulatory Policy Newsletter

document, include the methodology for assessing systemic
importance, the additional required capital – ranging from
1% to 2. 5% of extra common equity against risk weighted
assets – and the arrangements by which they will be phased
in. The GHOS is submitting this consultative document to
the FSB, which is coordinating the overall set of measures
to reduce the moral hazard posed by global systemically
important financial institutions. This package of measures
will be issued for consultation in late July.
The BIS has also announced that the GHOS has appointed
Stefan Ingves, Governor of Sveriges Riksbank (Sweden’s
central bank), as the new Chairman of the Basel Committee
on Banking Supervision. Mr Ingves succeeds Nout Wellink.
In its media release of 20 April, IOSCO reported the
opening of its Annual Conference public sessions, focusing
on the themes of securities regulators and systemic risk,
the challenges of debt markets, international corporate
governance and consumer education. The public conference
came at the conclusion of IOSCO’s private meetings which
have resulted in the decision by the Presidents’ Committee to
approve a new organisational structure and funding basis.
IOSCO also published a briefing note outlining the decisions
reached at this year’s Annual Conference. This covers
points on Strategic Direction; Objectives and Principles; the
Multilateral Memorandum of Understanding (MMoU); the
Initiative to Raise Standards of Cross-Border Cooperation;
New Work Mandates (in relation to the Emerging Markets
Committee); the SRO Consultative Committee; and Reports
approved for publication.
It also reports on appointments made during the Conference.
These include that of Maria Helena Santana, Chairperson of
the Comissão de Valores Mobiliários (CVM) of Brazil, who
has been appointed Chairman of the Executive Committee
to replace Jane Diplock AO, Chairman of the New Zealand
Securities Commission, who has stepped down; and that
of Masamichi Kono, Vice-Commissioner for International
Affairs, Financial Services Agency of Japan who has been
appointed Chairman of the Technical Committee to replace
Hans Hoogervorst, Chairman of the Netherlands Authority
for the Financial Markets (AFM), who has stepped down.
It has also been reported that Liechtenstein has become the
newest IOSCO member; and that nine securities regulators
are to join IOSCO’s fight against cross border market
misconduct, having been invited to become full signatories
of the IOSCO MMoU.
Contact: David Hiscock
david.hiscock@icmagroup.org
Crisis management
In March, ICMA submitted a response to the European
Commission in respect of its “bail-in” consultation (those
questions laid out in Annex A of its crisis management
consultation). The European Commission has now made
available information regarding the responses it received
to this consultation, which can be found through the
Commission’s crisis consultation web page. In the overview
of the results the portion relating to “bail-in” is section 8 (on
pages 19-23). In the list of answers (working document) the
portion relating to “bail-in” starts on page 34 and ends on
page 45 (covering consultation questions 62-68).
The technical details and the responses received will contribute
significantly to the development of draft legislation for a
comprehensive crisis management framework for banks and
investment firms intended to be tabled in September.
The IMF published a staff discussion note dated 27 May
which is entitled The Too-Important-to-Fail Conundrum:
Impossible to Ignore and Difficult to Resolve. This reviews the
too-important-to-fail (TITF) problem and considers whether
current policy proposals will resolve it. In summary this paper
states the following conclusions and policy implications:
•
no private financial institution should be viewed by markets
as being too important to be allowed to fail;
• policies are therefore needed to address the systemic risk
posed by institutions perceived as TITF and to reinstate
market discipline;
• these policies should be accompanied by certain key
elements to reinforce their effectiveness and limit their
unintended consequences;
•
REGULATORY RESPONSE TO THE CRISIS
although clear progress has been made in some of these
areas, tangible results are needed on a number of issues;
• these complex issues have been under intensive discussion
for many months within international forums, and they
involve difficult policy judgments; and
• in the interim, a subset of the measures that are simple
and straightforward could be implemented internationally
on a consistent basis.
ICMA Regulatory Policy Newsletter Third Quarter 2011 | 10