International Financial Regulation

The Financial Stability Board (FSB) has identified the institutions that it will designate as Globally Systemically Important Financial Institutions (G-SIFIs). The announcement was made today around the G-20’s Cannes Summit. In a related communication, the FSB stated: [click to continue…]

By Elaine O’Donnell

Alert: International Financial Regulation

Early this morning, the UK’s Independent Commission on Banking (“ICB”), chaired by Sir John Vickers, issued its final report on the reform of British banking.  The ICB largely reiterated the measures first outlined in its interim report in April and summarized in a previous Alert.  Whilst banks may not be initially rushing to relocate overseas, there is no doubt implementation of the ICB’s conclusions will be expensive (estimated at around £6 billion annually).  The ICB believes that incremental benefits will exceed costs by “a very large margin,” a view perhaps not widely held as London’s FTSE 100 reportedly fell by over 2.3% in early trading following the report’s release, with bank shares the biggest fallers.  The ICB’s challenge was twofold. As well as creating a more stable and competitive basis for UK banking, it was also tasked with ensuring an “effective and efficient” banking service to safeguard retail deposits.  The report notes the global events and goals to which the UK is subject and recognizes that part of the challenge is reconciling the UK’s position as an international financial centre with stable banking in the UK.  It remains to be seen whether the report will lead to enhancement or divestment of the UK’s reputation as a pre-eminent financial centre.

Financial Stability

The report proposes a combination of measures requiring structural reform and greater capital/other loss-absorbing capacity. The ICB intends risks associated with banking should not …

Click here for a full-text PDF of this alert.

by Peter King

As regulators seek to avoid a repeat of the 2008 financial crisis, attention is focused on a small group of financial institutions whose operations are so international and so significant that their collapse could adversely affect all financial markets. The Basel Committee on Banking Supervision has been at the forefront of attempts to agree global standards in this area. Following on from its papers on the so-called Basel III framework, it has now published a paper on how regulators should determine what are global systemically important banks or G-SIBs.

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The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank or the Act) was enacted one year ago. At that time, it was heralded as perhaps the most dramatic set of regulatory reforms since the 1930s. The Act was expected to have significant effects in both the short and long term. Dodd-Frank’s provisions, however, are not confined to the US market. The Act is intended to have significant implications for non-US companies doing business in the United States or whose securities are listed on a US stock exchange. What is more, the Act purports to regulate certain transactions and entities with little direct connection to the United States.

by Madelene Cook

Introduction

On 16 June 2011, the UK government, via HM Treasury, published its planned White Paper, A new approach to financial regulation: the blueprint for reform.  The Paper sets out further details of the government’s proposals for establishing a new system of more specialized and focused financial services regulators and was prepared taking into account responses the government received during two previous rounds of consultation during the summer of 2010 and in February 2011.

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