FSA will be ready to implement the bulk of the final CRD rules in two weeks
The FSA chief executive confirms that UK is set for Basel II implementation.
The board of the UK regulatory authority will be invited to make the majority of the final Basel II rules law within two weeks, stated the chief executive of the Financial Services Authority (FSA), John Tiner.
Referring to the Capital Requirements Directive (CRD), Tiner confirmed that UK law will be finalised for “the longest and most technically complex pieces of financial legislation to emanate from Brussels,” in the next fortnight.
Tiner said that while he appreciates that outstanding issues remain over Pillar II, the FSA will use the opportunity to foster a regulatory dialogue between the FSA and financial institutions. “I remain a firm believer that we should not seek to use Pillar II in such a way that renders the capital benefits that firms may get under Pillar I nugatory,” he said.
The regulator noted that home-host issues may pose some difficulty, and many banks are concerned that implementation of Basel II will pose problems. “We are all familiar with the potential difficulties that arise out of the decision to delay Basel II implementation in the US by two years. I am unable to provide a cast-iron guarantee that everything will be plain sailing,” he said.
Tiner emphasised that work with international regulators was ongoing to reduce the regulatory burden and minimise any cross-border issues.
Cost savings must not get in the way of effective regulation
Tiner also addressed the FSA’s new approach to regulation. He emphasised that while the new principles-based rules may reduce the cost of regulation overall, better regulation does not directly translate to cost reduction.
“Whilst we are serious about delivering, where justified, significant reductions in costs incurred by firms complying with our regulations, we will not do this where it undermines the effectiveness of regulation to secure market confidence, consumer protection and a reduction in financial crime,” he said.
However, Tiner emphasised that the FSA is continuing to search for and remove rules that are no longer effective or appropriate.
Tiner noted that many firms desired the certainty of prescriptive rules, and are concerned that useful guidance for implementing regulation will not be forthcoming. To this end, the FSA is going to release a discussion paper at the beginning of next month to outline its approach to an institution’s own guidance.
Mifid
Acknowledging that the recent suggestion to use benchmarking for best execution was hugely unpopular with the industry, Tiner said that marrying the requirements of the Markets in Financial Instruments Directive (Mifid) has proved an incredibly complex task. He said that discussions with industry are helping to shape UK implementation of the Directive, and that a new discussion paper will be released later this month.
Click here to see Tiner’s speech in full.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@risk.net
More on Regulation
The boy who cried ‘outlier’: false alarms could dog EBA test
Analysis reveals banks deemed outliers by net income test are profitable post-shock, so how useful is the test?
Modernising compliance functions with regtech
Regtech addresses the complexities of regulatory requirements, offering innovative tools to modernise compliance functions, streamline processes and enhance efficiency. This article explores its role in compliance and reporting within the banking sector,…
For the Fed discount window, destigmatisation starts at home
US supervisors must change tack to encourage central bank liquidity utilisation
Study finds just 10 banks plan to apply for FRTB models
Research provides extra insight on reasons for decline in internal models
EU banks hedge net interest income to pass new IRRBB test
Would-be outliers look to cut sensitivity of cashflows to rate moves, but at what cost?
Banks cry foul over shock decision from Basel Committee
Asset and liability management professionals question severity of criteria in revised IRRBB tests
Fresh EU push for single securities supervisor to compete with US
But MEP expresses ‘concern’ EU nations will stall revival of capital markets union
Discord deepens over fund-linked trades in FRTB
More banks use punitive approach to capital treatment under new trading book regime, irking regulators