September 25, 2009 / 9:11 PM / 10 years ago

FACTBOX: FSB report on G20 financial rules progress

(Reuters) - The Financial Stability Board, which coordinates the Group of 20 regulation initiatives, said on Friday there has been good progress in strengthening the financial system to apply lessons from the credit crunch.

The following are highlights from the FSB progress report:

* Supervisory colleges have been set up for more than 30 large, complex cross-border financial institutions. Membership of some colleges may be too broad to be effective.

* Work continues to get big banks to draw up contingency and resolution plans. FSB preparing list of main elements that must be included.

* National authorities should encourage simplification of group structures to make resolution easier.

* The Basel Committee on Banking Supervision to issue concrete proposals by year end on a capital surcharge at systemically important banks.

* FSB says new bank capital rules will require a clear step up in the amount and quality of capital. New rules set out by end of 2009, actual levels determined by end of 2010 which implementation phased in after then.

* Basel Committee to complete proposals by year end on new liquidity requirements for banks, with actual levels of liquidity agreed by end of 2010. It will “substantially” raise the bar on global liquidity risk regulation.

* A study by supervisors on how margining practices in securities financing and over-the-counter derivatives transactions evolved during the crisis will be used to consider policy options by January 2010.

* A report will be presented to G20 finance ministers in November on what methods could be used to determine if a financial institution is of systemic importance.

* Basel Committee will assess the need for a capital surcharge on systemically important banks.

* Basel Committee working on revisions to make sure that capital requirements on OTC derivatives adequately reflect the risks. New standards will be issued by end June 2010.

* Reviews will start by the end of 2009 on whether all members of the FSB — made up of the G20 countries — are applying agreed FSB principles and recommendations.

* G20 leaders want convergence of accounting standards, which involves meshing U.S. Financial Accounting Standards Board rules with those of the International Accounting Standards Board. FSB says the two have yet to take action to include its recommendations on alternatives to valuing assets.

* IASB and FSAB approaches could “possibly lead to divergences” and urgent additional work is needed to meet goals of convergence, transparency and reduce crisis amplifying effects.

* The G20 has agreed that credit rating agencies should be made to register. Work needed to avoid national initiatives fragmenting the global ratings market.

* Basel Committee will present proposals in December on how to deal with “inappropriate incentives” from the use of credit ratings to determine levels of bank capital.

* Supervisors will identify by the end of 2009 other key areas where the regulatory “perimeter” needs expanding.

To see story: Accountant rule setters ticked off over fair value ...

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