Key Attributes of Effective Resolution Regimes for Financial Institutions

Subject Area Institutional and Market Infrastructure
Issuing Body

Financial Stability Board (FSB)

Date of Issuance

October 2011

Location

http://www.financialstabilityboard.org/publications/r_111104cc.pdf  

Summary Description

The Key Attributes of Effective Resolution Regimes for Financial Institutions (the 'Key Attributes') set out the core elements that the FSB considers to be necessary for an effective resolution regime.

Detailed Description

The Key Attributes of Effective Resolution Regimes for Financial Institutions (the 'Key Attributes') set out the core elements that the FSB considers to be necessary for an effective resolution regime. Their implementation should allow authorities to resolve financial institutions in an orderly manner without taxpayer exposure to loss from solvency support, while maintaining continuity of their vital economic functions. They set out twelve essential features that should be part of the resolution regimes of all jurisdictions. They relate to:

  • Scope
  • Resolution authority
  • Resolution powers
  • Set-off, netting, collateralisation, segregation of client assets
  • Safeguards
  • Funding of firms in resolution
  • Legal framework conditions for cross-border cooperation
  • Crisis Management Groups (CMGs)
  • Institution-specific cross-border cooperation agreements
  • Resolvability assessments
  • Recovery and resolution planning
  • Access to information and information sharing.

Not all resolution powers set out in the Key Attributes are suitable for all sectors and all circumstances. To promote effective and consistent implementation across jurisdictions the FSB will continue to work with its members to develop further guidance, taking into account the need for implementation to accommodate different national legal systems and market environments and sector-specific considerations (e.g., insurance, financial market infrastructures).

 

The Annexes I to IV provide more specific guidance to assist authorities in implementing the Key Attributes with respect to:

  • institution-specific cross-border cooperation agreements (Annex I)
  • resolvability assessments (Annex II)
  • Recovery and Resolution Plans (Annex III)
  • temporary stays on early termination rights (Annex IV).