The Financial Market Law Commission (FMLC) has published a letter sent to the Financial Stability Board (FSB) on bank recovery and resolution.

In the letter, the FMLC notes that the FSB Term Sheet continues to give rise to a number of legal uncertainties which are liable to lead to differences in the implementation of the FSB Term Sheet by national governments and regulatory authorities. The Commission notes that in order to achieve a uniform international approach to total loss-absorption capacity (TLAC), it is imperative that the resolution authority in any jurisdiction has confidence in the resolution frameworks in place in other jurisdictions in which a global systemically important bank has branches or subsidiaries.

Moreover, the Commission suggests that in order to improve clarity as to whether financial instruments will comply with the requirements for inclusion in TLAC, the FSB should provide guidance to national governments and regulatory authorities as to the possibility of grandfathering issues of financial instruments.

View FMLC concerns about legal uncertainties relating to FSB’s TLAC standards, 8 February 2016