Market Fragmentation: Promote cross-border regulatory coordination and consistency
Policymakers and regulators responded expeditiously to the global financial crisis, acting to implement a series of regulatory reforms meant to improve the resiliency of the financial system.
Now that many of these reforms are fully implemented, it is prudent to review their impact and interaction to ensure they are achieving their stated goals without unduly harming economic growth.
GFMA submits response to the FSB's Consultation Paper on Evaluation of the Effects of Too-Big-to-Fail Reforms
GFMA submitted a response letter to the FSB in regarding its consultation on evaluation of too-big-to-fail (TBTF) reforms for banks. The response outlined key achievements in addressing TBTF, the areas that warrant further analysis and the other questions that should be asked in order to complete the evaluation.
GFMA, ISDA and the IIF sent a joint letter to the Basel Committee outlining concerns on the impact of the revised Credit Valuation Adjustment (CVA) Framework. The letter notes that industry QIS indicated that the framework will result in substantial increases in capital requirements.
GFMA, IIF and ISDA Submit Response to BCBS on Leverage Ratio Treatment of Client Cleared Derivatives
GFMA, the International Swaps and Derivatives Association (ISDA) the Institute of International Finance (IIF) submitted a join response to the Basel Committee on Banking Supervision’s consultation on the leverage ratio treatment of client cleared derivatives. The industry believes that in the context of a bank exposure created by a client cleared derivative transaction, the leverage ratio framework should recognize the exposure-reducing effect of initial margin, particularly as it is not used to increase the bank’s leverage.
GFMA FX Division Submits Comments to the BCBS on its Consultative Document 'Leverage ratio treatment of client cleared derivatives'
GFMA FX Division Submits Comments to the BCBS on its Consultative Document “Leverage ratio treatment of client cleared derivatives”
The GFMA and ICMA Repo Market Study: Post-Crisis Reforms and the Evolution of the Repo and Broader SFT Markets
GFMA and IIF Response to FSB Consultation on Impact of Reforms on Infrastructure Finance, August 30
GFMA published Principles for Achieving Consistent Regulatory Regimes and Supervisory Practices.
2018 marks ten years on from the Group of 20 (G20) response to the global financial crisis that ushered in financial regulatory reforms that have transformed global capital markets and enhanced financial stability. To improve regulatory outcomes and deliver on the benefit of reforms, GFMA calls on global financial regulators to agree to principles to design regulatory cooperation arrangement(s) to develop consistent regulatory regimes and supervisory practices. GFMA encourages global policymakers to establish regulatory cooperation arrangement(s) that (are): (i) Forward-looking; (ii) Enhance cross-border investment and market integrity; (iii) Supportive of similar outcomes; (iv) Predictable; (v) Transparent; (vi) Evidence-based; (vii) Proportionate; (viii) Enhance market certainty; (ix) Strengthen supervisory coordination; and (x) Supportive of conflict mitigation.
“Now is the time for global financial regulators to design and adopt regulatory cooperation arrangements to deliver consistent regulatory regimes and supervisory practices to strengthen the foundation for strong, sustained and balanced growth leading to global job creation,” said Mark Austen, chief executive officer of GFMA and chief executive officer of ASIFMA. “These principles aim to balance the legitimate national interests of domestic regulators and supervisors with a genuine commitment to the global common good of a safe, open and competitive global market, which has been a hallmark of the G20 reform agenda. We encourage global policymakers to adopt these principles for regulatory cooperation arrangements, which we believe will improve long-term market integrity, efficiency, liquidity, and resilience by minimizing the risk of fragmentation and the adverse effect it has on global economic growth.”
GFMA published Guiding Principles for Market Transparency.
Increasingly, regulators are developing public transparency requirements across markets and jurisdictions, which highlights differing policy objectives for rules and the need for shared global principles. Market transparency requirements should support specific policy objectives, consider the fundamental structural differences between markets and among asset classes, and provide meaningful and useful information to market participants while doing no harm to market integrity, liquidity, efficiency and resilience. Fundamental structural differences between markets, including participants and their needs, preclude a “one-size-fits-all” approach.
GFMA encourages policymakers and regulators to design market transparency frameworks in line with the following principles:
I. Transparency to regulators should be timely, consistent and appropriate to fulfil market surveillance duties and to support market integrity.
II. Public market transparency requirements should support the provision of liquidity for price formation and risk management, while doing no harm to market integrity, liquidity, efficiency and resilience.
III. The level of transparency and timing for reporting should be appropriately calibrated based on regulatory intent, market structure, and liquidity profiles of specific assets.
IV. An effective transparency framework is based on consultation with all market participants and a cost-benefit analysis.
V. The market’s ability to implement requirements, including on a cross-border basis, if appropriate, is critical.
See: Full Press Release here.
GFMA, which represents the common interests of the world’s leading financial and capital market participants, believes that Brexit is an issue that has unique and global spillovers, not just isolated to the UK and EU. Brexit is an event of such magnitude that it will affect almost all dimensions of the global economy, including financial services, in some way.
The GFMA White Paper, ‘Brexit: Implications for the Global Financial System’ focuses on issues that our global members have identified as most important to their cross-border businesses and the international investment and economic growth they support.
GFMA, ISDA and JFMC Joint Response on FSB's consultation on Proposed Framework for Post-Implementation Evaluation of the Effects of the G20 Financial Regulatory Reforms
GFMA, the International Swaps and Derivatives Association (ISDA) and Japan Financial Markets Council (JFMC) responded to the Financial Stability Board (FSB) on FSB's consultation on Proposed Framework for Post-Implementation Evaluation of the Effects of the G20 Financial Regulatory Reforms.
GFMA and IIF Submit Comments to IOSCO Regarding Examination of Liquidity of the Secondary Corporate Bond Markets
GFMA and the Institute of International Finance (IIF) provide comments to the International Organization of
Securities Commissions (IOSCO) in response to the IOSCO paper and consultation issued in August 2016 entitled Examination of Liquidity of the Secondary
Corporate Bond Markets.
GFMA Submits Letter to Multiple Regulators along with a Report on the Interaction, Coherence, and Overall Calibration of Post Crisis Basel Reforms
GFMA provides letter to multiple regulators accompanying a copy of a report commissioned from Oliver Wyman, which analyzes the interaction, coherence, and overall calibration of post crisis regulatory reform measures agreed upon, or under active consideration, by the Basel Committee on Banking Supervision (BCBS). The full report is available here.
Also, see: GFMA Press Release
GFMA with Other Associations Submit Letter to Multiple Regulators on Global Trade Reporting and Data Harmonization
GFMA, SIFMA and the Asset Management Group of SIFMA (SIFMA AMG), The Australian Financial Market Association (AFMA), the Alternative Investment Management Association (AIMA), the British Bankers Association (BBA), the German Investment Funds Association (BVI), the European Fund and Asset Management Association (EFAMA), the Futures Industry Association (FIA Global), the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association (GFMA), the International Swaps and Derivatives Association (ISDA), the Managed Funds Association (MFA) and The Investment Association provide comments supporting key principles to improve global trade reporting and data harmonization.
This letter was sent to:
Canadian Securities Administrators
Reserve Bank of Australia
GFMA provides comments to the International Organization of Securities Commissions (IOSCO), the BIS’ Committee on Payments and Market Infrastructures (CPMI), and others commending their proactive role in addressing cybersecurity, and encouraging them to work jointly with industry to defend against cyber attacks and cyber crime and increase the protection of financial markets and financial market participants.
GFMA provides comments to the Office of the Comptroller of the Currency (OCC,) Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation (FDIC), Federal Housing Finance Agency (FHFA), Farm Credit Administration and the Commodity Futures Trading Commission (CFTC) on margin and capital requirements for covered swap entities and margin requirements for uncleared swaps.
GFMA wrote a letter to all G20 Finance Ministers recommending improved coordination in the implementation of reforms in different jurisdictions. GFMA believes international coordination efforts can be strengthened further and that more needs to be done at the G20 level to ensure individual jurisdictions honor their global commitments in domestic policy implementation.
GFMA writes a letter to the B20 on the importance of "Improving Global Regulation of Markets."
Over the last few years, it has become apparent that a major challenge to the implementation of financial regulatory reform efforts has been diverging (and at times conflicting or duplicative) national and/or regional regulatory frameworks.
GFMA believe that an outcomes-focused recognition approach, where regulators are able to rely on the oversight of other regimes adhering to the same general regulatory objectives, would serve to avoid many of the above referenced issues.
GFMA and JFMC Letter to IOSCO Regarding Global Regulatory Coordination and Responses to IOSCO Task Force on Cross-Border Regulation Roundtable Questions
GFMA and the Japan Financial Markets Council (JFMC) provide comments to International Organization of Securities Commissions (IOSCO) with recommendations on Global Regulatory Coordination and responses to IOSCO Task Force on Cross-Border Regulation Roundtable Question Sets
The Commodities Working Group (CWG) of GFMA provides comments to the International Organization of Securities Commissions (IOSCO) and the Financial Conduct Authority (FCA) on the implementation of PRA Principles (Principles) which were published October 2012.
GFMA welcomes the development of these Principles by IOSCO as a step towards ensuring that key oil market benchmarks are subject to robust, consistent, transparent and sound practices. Moreover, we fully endorse IOSCO’s review of the implementation of the Principles to ensure the smooth functioning and transparency within these markets.
While supportive of the progress to date, GFMA considers that more could be done to ensure market integrity. GFMA believes that PRAs should move forward with codes of conduct in line with the Principles. These codes must be sufficiently robust to ensure transparency of methodology and price assessment, and also to strengthen governance oversight, internal controls (including identification of trade anomalies and verification by third parties) and management of conflicts of interest.
GFMA Chief Executive Simon Lewis writes to the editors of the Financial Times calling for G20 finance ministers and financial heads of all nations to formally endorse the robust application of the international principle of comity – where the home regulator defers to the host regulator where the latter’s rules are consistent with the G20 recommendations and best practices.
GFMA Submits Comments to IOSCO on Recommendations on Foundational Principles for Global Coordination in Cross-Border Regulation
GFMA provides comments to the International Organization of Securities Commissions (IOSCO) offering recommendations on foundational principles for global coordination in cross-border regulation. IOSCO is creating a task force aimed at addressing cross-border regulatory coordination issues (the Task Force).
GFMA is supportive of the Task Force’s stated intention of issuing a public consultation paper focused on cross-border reform efforts and hosting public industry meetings for continued dialogue; and believes IOSCO can and should play an integral role in promoting coordination. Consequently, in advance of the Task Force’s consultation paper, GFMA writes to highlight several issues currently impacting cross-border regulatory coordination, which it believes are immediately actionable by IOSCO.
GFMA prepared this presentation, which proposes a holistic an globally inclusive Regulatory Recognition Approach. The presentation details key components of the approach, benefits, shared values and commonality of objectives, and regulatory principles.
GFMA Submits Comments to G20 in Support of Global, Consistent Standards and Meaningful Regulatory Reform
GFMA provides comments to all G20 Finance Ministers in Support of Global, Consistent Standards and Meaningful Regulatory Reform. This letter addresses important developments related to implementation and global consistency of the G20s regulatory reform agenda which may risk divergence from consistent implemention.
GFMA provides comments to the Basel Committee on Banking Supervision (BCBS) on the Discussion Paper: The Regulatory Framework: Balancing Risk Sensitivity, Simplicity and Comparability.
The Discussion paper steps back from the significant regulatory reforms introduced by the Basel Committee and member jurisdictions to consider the resulting complexity in capital adequacy requirements as well as the comparability of capital adequacy ratios across jurisdictions. The Discussion paper raises important questions about the capital adequacy framework (the Framework) including: whether reliance on risk‐based capital at the core of the Framework appropriately balances varied objectives and the extent to which the framework strikes the right balance between simplicity, comparability, and risk sensitivity.
GFMA believes that while the risk‐based capital framework is not perfect, all elements of it are sound and reflect years of study, practice, and enhancement. Further, GFMA agrees with the Basel Committee that the risk‐based capital framework must continue to evolve, and be updated frequently, to be consistent with changing markets, products, and institutions, and as understanding about how to better reflect risk in regulatory capital improves.
GFMA provides comments to the Organisation for Economic Co-operation and Development (OECD) on the OECD's Action Plan for Base Erosion and Profit Shifting (BEPS). GFMA shares concerns that certain aspects of the Action Plan could have unintended consequences for the financial services industry. In order to minimize the risk of possible unintended effects, GFMA requests that the OECD consider the potential implications of the action items for the financial services industry.
GFMA provides comments to the Financial Stability Board (FSB) in response to the FSB's Consultative Document:Information sharing for resolution purposes, 12 August 2013.
GFMA is strongly supportive of the work of the FSB towards establishing an effective cross-border recovery and resolution framework and the Key Attributes of Effective Resolution Regimes for Financial Institutions. Cross-border cooperation is a crucial requirement for effective cross-border resolution and GFMA strongly supports efforts to strengthen and facilitate greater cross-border cooperation in this area. In that context, GFMA shares its expertise in response to the Consultative Document.
GFMA Submits Comments to the Financial Stability Board (FSB) and the International Organization of Securities Commissions (IOSCO) on the Implementation of Market Regulations and their role.
GFMA provides comments to the Financial Stability Board (FSB) and the Basel Committee on Bank Supervision (BCBS) on the implementation of prudential standards. The post‐crisis international regulatory framework represents a major step forward from that which existed prior to the financial crisis. GFMA shares concerns that as the implementation phase begins for many of these regulatory reform initiatives, however, instances of divergence from agreed frameworks have increased. Some jurisdictions have also adopted or are considering additional reforms beyond international consensus (e.g., structural banking reforms). Inconsistent prudential standards, including variations in supervisory practices, and a trend toward regulatory fragmentation could increase regulatory arbitrage, undercut efforts to develop a credible cross‐border resolution regime, and undermine international cooperation on policymaking.
GFMA and the International Swaps and Derivatives Conference, Inc. (ISDA) provides comments to the Basel Committee for Banking Supervision (BCBS) in response to the BCBS Consultation Document, Recognising cost of credit protection purchased (published 22 March 2013). The groups are concerned that, while capturing a small number of transactions deemed abusive by the regulators, the proposed rule would have a disproportionate effect on a wide range of banks' financing activities (both in corporate and investment banking), wherever banks seek to hedge borrower credit risk or associated counterparty risk. In addition the groups voice concerns about synthetic securitisation transactions, non-securitisation transactions, the potential impact of changes to the accounting standards affecting loan loss reserves, and additional questions posed in the BCBS Consultation Document.
Change on the scale of the US Dodd-Frank legislation and the EU programme of regulatory reform brings with it a unique opportunity to build a regulatory framework that achieves significant gains in levels of protection for customers and levels of financial stability for the global economy.
Undertaking reform on such a significant scale also risks making changes that are broader in scope than may be necessary or which are focused purely on domestic concerns or issues whilst ignoring the impacts on wider, international financial markets. This can lead to regulation that is inappropriately extraterritorial in effect and elements of regulation that diverge significantly between major financial centres.
This GFMA paper refers to specific examples of legislation or regulation in the US and EU which illustrate the concerns to which measures are giving rise.
This GFMA letter sets out a summary of EU legislation which has recently been proposed or which is in the process of being implemented, and which has an extraterritorial effect which may have an impact on non-EU markets and Asian markets in particular.
Extraterritoriality arises both intentionally in EU legislation (e.g., where the legislation expressly states that it is intended to apply to non-EU entities), and also unintentionally (e.g., where the territorial scope of legislation is unclear, or where obligations which apply to an EU entity may end up having an impact on that entity's clients or counterparties).
This GFMA letter sets out a summary of U.S. financial regulatory measures that have recently been proposed or are in the implementation process, which may have an extraterritorial impact on non-US markets – particularly Asian markets. These measures are generally mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), enacted in 2010 by the U.S. Congress in response to the financial crisis that erupted in the prior years.
GFMA provides comments to the International Organization of Securities Commissions (IOSCO) on IOSCO's Consultation Report, Regulatory Issues Raised by Changes in Market Structure, published March 2013. GFMA believes that, as securities markets evolve and new technologies continue to develop, it is critical that regulators regularly consider existing regulatory requirements, with a goal of maintaining efficient and robust market structures that protect investors while facilitating active competition among trading spaces. GFMA provides its reactions and comments to the Consultation Report’s recommendations and questions, each from a U.S. and European markets-perspective.
GFMA and Other Associations Submit Comments to the G20 Finance Ministers Opposing the EU's Proposed FTT
GFMA, the Australian Financial Markets Association (AFMA), the Investment Industry Association of Canada (IIAC), the Japan Securities Dealers Association, and the Korea Financial Investment Association (KOFIA) provide comments to all G20 financial ministers expressing their strong opposition to the EU's proposed financial transaction tax (FTT). The groups believe the FTT would have unprecedented extraterritorial impacts, contrary to G20 principles, and would harm economic growth.
GFMA Submits Comments to IOSCO on the Consultation Report Entitled Global Developments in Securitisation Regulation
GFMA provides comments to the International Organization of Securities Commissions (IOSCO) on the consultation report entitled "Global Developments in SecuritisationRegulation" (the Consultation Report), and the corresponding proposed policy recommendations.
GFMA provides comments to the Commodity Futures Trading Commission (CFTC) on the Proposed Interpretive Guidance on the Cross-Border Application of Certain Swaps Provisions of the Commodity Exchange Act (RIN 3038–AD57) and the Proposed Exemptive Order Regarding Compliance with Certain Swap Regulations (RIN 3038–AD85).
GFMA Submits Comments to the BCBS Consultation on Consultative Document - A framework for dealing with domestic systemically important banks
GFMA provides comments to the Secretariat of the Basel Committee on Banking Supervision on the recent consultative paper, A framework for dealing with domestic systemically important banks (the D-SIB framework).
GFMA Submits Comments to the Basel Committee on the Joint Forum’s consultative document: Principles for the supervision of financial conglomerates
GFMA provides comments to the Secretariat of the Basel Committee on Banking Supervision (BCBS) on the consultative document: Principles for the supervision of financial conglomerates. GFMA supports the development of consistent and effective supervision of global financial firms, and welcomes the work of the Joint Forum on strengthening the supervision of financial conglomerates (FCs).
GFMA and other Associations Submit Comments to the US Department of Treasury and the European Commission on Extraterritorial Legislation
GFMA, the International Banking Federation (IBFed), the International Swaps and Derivatives Association (ISDA), and The Financial Services Roundtable (FSR) provide comments to the U.S. Department of Treasury and the European Commission, in advance of the G-20 meeting, on the problems that extraterritorial legislation poses for markets, clients and regulators. While groups welcome the ongoing discussions among U.S. and EU finance officials and relevant regulators to coordinate their respective regulatory reforms, a strong concern continues to be the emphasis on equivalency. In addition, the groups advise that standards of comparability should be outcomes based, and not used as a tool to export regulations from one jurisdiction to another.
GFMA and Other Associations Submit Comments to the Financial Stability Board on Consultative Document - Common Data Template for G-SIBs
GFMA, American Bankers Association (ABA), The Clearing House, and the Financial Services Roundtable provide comments to the Financial Stability Board on the Consultative Document: Understanding Financial Linkages: A Common Data Template for Global Systemically Important Banks, 6 October 2011.
GFMA with Other Associations Submit Comments to EU Commissioner and US Treasury Secretary Regarding EU Extraterritorial Effects and US Derivatives Regulation
GFMA and 7 other Associations provide comments to EU Commissioner, Michel Barnier, and Treasury Secretary, Geithner, in relation to extraterritoriality in international regulators’ work on derivatives business.
This is a joint letter on extra‐territorial effects in EU and US regulation of derivatives with International Swaps and Derivatives Association (ISDA), European Banking Federation (EBF), Alternative Investment Management Association (AIMA), Futures and Options Association (FOA), Investment Management Association (IMA), and Wholesale Market Brokers’ Association (WMBA) and London Energy Brokers’ Association (LEBA).
Washington, D.C., 10 January 2019 – New Financial, commissioned by the Global Financial Markets Association (GFMA), has today published a new major industry report, “The New Financial Global Capital Markets Growth Index.” The purpose of the report is to provide an in-depth review and comparison of national and regional capital markets across the globe in terms of market size, depth, and access to pools of capital.
GFMA and ICMA Release Study on Post-Crisis Reforms and the Evolution of the Repo and Broader SFT Markets
GFMA Statement on Appointment of Randal Quarles as Chair of Financial Stability Board and Klaas Knot as Vice Chair
HONG KONG, LONDON and WASHINGTON, 17 April 2018 – The Global Financial Markets Association (GFMA), which represents the common interests of the world’s leading financial and capital market participants, released “Principles for Achieving Consistent Regulatory Regimes
Oliver Wyman Report Highlights Risks to Markets from Basel Reforms; Recommends Further Impact Analysis
Oliver Wyman Report Highlights Risks to Markets from Basel Reforms Recommends Further Impact Analysis GFMA Urges Basel to Undertake Period for Observation and Adjustments to Rules Washington, 10 August 2016 – The Global Financial Markets Association (GFMA) today released
Release Date 12 August 2015 Contacts Krishna Rao, PwC +44 207 804 3765, firstname.lastname@example.org Katrina Cavalli, GFMA +1 (212) 313 1181, email@example.com Rebecca Hansford, AFME +44 (0)20 743 9367, firstname.lastname@example.org Vijay Chander, ASIFMA +852 2531 6521,