On 14 October 2019, the Financial Stability Board (FSB) published a report to G20 Finance Ministers and Central Bank Governors providing progress updates on its ongoing work on market fragmentation.
In its June 2019 report on market fragmentation, the FSB identified four areas for further work to address market fragmentation. The latest report provides a follow-up on the work done since:
- The International Organisation of Securities Commissions (IOSCO) June 2019 report on market fragmentation and cross-Border Regulation proposed several measures to strengthen cooperation between IOSCO members and mitigate the risk of future fragmentation. The IOSCO board will consider whether and how to take these proposals forward at its October 2019 meeting. If these proposals also consider deference relating to financial market infrastructures, this aspect of work would be conducted jointly with the Committee of Payments and Market Infrastructures (CPMI), where appropriate. To include considerations relevant to the FSB’s mandate, IOSCO and the CPMI will co-operate with the FSB. IOSCO is also developing a repository for deference assessments, which will include those that have been conducted by member jurisdictions as well as their final outcome;
- pre-positioning of capital and liquidity. The FSB has taken forward work on this issue through the review of the technical implementation of the total loss-absorbing capacity (TLAC) standard, completed in July 2019 and through a workshop held in September 2019 with external stakeholders on prepositioning and ring fencing. Further work will continue on these issues, including going-concern requirements and those related to resolution;
- regulatory and supervisory co-ordination and information sharing. The FSB is exploring the establishment of a repository providing information on regulatory initiatives that could have cross-border relevance. The FSB will discuss the detailed arrangements in early 2020 and is also considering other approaches to avoid future fragmentation. These include the possibility to promote greater use of common elements in the reporting of supervisory data; and
- too-big-to-fail evaluation. The FSB has conducted stakeholder outreach through workshops to exchange views with relevant stakeholders on this topic and through a call for public feedback. It will issue a draft evaluation report for public consultation in June 2020. The final report will be published in late 2020.