* Tougher regime for insurers, domestic banks ready end 2012
* FSB to examine role of auditors at financial firms
* FSB sets up derivatives group to help meet G20 deadline
* FSB may not replace Hildebrand who stepped down Monday
By Katie Reid and Huw Jones
BASEL, Switzerland/LONDON, Jan 10 Global
regulators said on Tuesday they would complete work on a tougher
supervisory framework for big insurers and systemically
important domestic banks by the end of the year.
The Financial Stability Board (FSB) also said its work on
rules for the "shadow banking" sector, such as private equity
groups, hedge funds and money market funds, continued with
further review in March.
FSB Chairman Mark Carney said it would be surprising if
there would be a single approach across the shadow banking
"The insurance discussion is much more mature than the
shadow banks discussion," Carney told a news conference.
Insurers argue strongly they were not a cause of the
financial crisis and should not be saddled with capital
surcharges like the biggest cross-border lenders will be.
Carney said there are no plans for now to publish the names
of insurers that will undergo more intense supervision.
The FSB is the regulatory task force of the world's group of
top 20 economies (G20) and is charged with implementing pledges
to reform banks and markets after the financial crisis.
It has already completed work on new capital and liquidity
rules from 2013 for banks, known as Basel III.
Capital surcharges for the world's biggest banks were also
approved last November and the board is now turning its
attention to extending a tougher supervisory framework to all
systemically important financial institutions, such as insurers,
clearing houses and large domestic-focused banks.
The exact mechanics and degree of national discretion over
global rules for the domestic banks was still being discussed
and was "moving forward quite smartly", Carney added.
The FSB said it would deliver concrete proposals in April
for a global "legal entity identifier" aimed at making it easier
to spot who is behind each market transaction.
The board also said for the first time it was looking at how
audits of banks and other financial firms could provide early
warnings of problems to supervisors "and to encourage work to
improve the intensity and effectiveness of regulation of
The Big Four auditors -- KPMG, Deloitte,
PwC and Ernst & Young -- have been criticised
by policymakers for failing to highlight problems at banks in
the run up to the crisis.
The G20 has pledged to introduce tough new rules to inject
transparency and better supervise the $700 trillion derivatives
market by the end of this year.
Progress in the United States and European Union is slow in
parts, casting doubt on the G20 deadline, and the FSB on Tuesday
set up a coordination group to keep the reforms on track.
"An initial focus of the group will be on establishing
adequate safeguards for a global framework for central
counterparties so that, by June 2012, authorities can make
informed decisions on the appropriate form of central
counterparties to meet their commitment that all
over-the-counter derivatives be centrally cleared by end-2012,"
the FSB said.
Carney, who is also governor of the Bank of Canada, took up
the reins at the FSB last November, replacing Mario Draghi who
left to become European Central Bank president.
Philipp Hildebrand stepped down as vice-chairman of the FSB
on Monday after he resigned as chairman of the Swiss National
Bank over a currency trade by his wife.
Carney said the "consequence is that it does not follow
there is a replacement" to Hildebrand at the FSB.