RESTRICTED  
  
S/FIN/W/90  
 
14 June 2016  
(16-3258)  Page: 1/7  
Committee on Trade in Financial Services   
 
 
INTERNATIONAL STANDARD-SETTING BODIES 
RECENT DEVELOPMENTS 
NOTE BY THE SECRETARIAT1 
 
 
1  INTRODUCTION 
1.1.  The purpose of this Note is to provide an ov erview of standard-setting activities by the BCBS, 
the FSB, the IAIS, and IOSCO over the last two years. The Note focuses on the development of 
standards included in the compendium kept by the FSB.2 It updates the information provided by 
representatives of the Basel Committee on Banking Supervision, the Financial Stability Board, the 
International Association of Insurance Supervisors and the International Organization of Securities Commissions at the meeting of the Committee on 6 May 2014.
3 A total of 25 standards have been 
introduced or revised since May 2014. The Note provides a brief description of all standards 
developed since then, based on publicly availabl e information. In addition, whenever relevant, 
specific trade-related aspects are highlighted.  
2  BASEL COMMITTEE ON BANK ING SUPERVISION (BCBS) 
2.1.  Principles for effective supervisory colleges (June 2014) . In June 2014, the BCBS reviewed its 
"good practice principles on supervisory colleges ", established in 2010. The overarching objective 
of a supervisory college is to assist its members in developing a better understanding of the risk 
profile and vulnerabilities of a cross-border banking group and to provide a framework for 
addressing key topics that are relevant to the su pervision of the group. This set of principles, 
which reflect current best practice, should be interpreted in the context of broader aspects of 
home-host cooperation covered, for example, in the Committee’s 1975 Report on the supervision 
of banks' foreign establishments (the Concordat), the 2006 principles on home-host information-
sharing for effective Basel II implementation , and the 2012 Core principles for effective banking 
supervision .4  
 
                                               
1 This document has been prepared under the Secret ariat's own responsibility and is without prejudice 
to the positions of Members or to thei r rights and obligations under the WTO. 
2 The Compendium of Standards lists the various internationally accepted economic and financial 
standards - by both subject area and issuing body. Th e Compendium includes both key standards which the 
FSB has designated as deserving of priority implementation depending on country circumstances, and other 
standards that are complementary in nature and cover particular functional areas. The Compendium is an 
initiative of the FSB and is a joint product with relevant international standard-setting bodies. It is reviewed and updated periodically, and is available at: http://www.fsb.org/what-we-do /about-the-compendium-of-
standards . 
3 The report of the meeting is co ntained in document S/FIN/M/80. 
4 The following documents have been publishe d since the 1975 publication of the Concordat: Principles 
for the supervision of bank s’ foreign establishments (1983), Minimum standards for the supervision of 
international banking groups and th eir cross-border establishments (1992), The supervision of cross-border 
banking (1996), Essential elements of a statement of cooperation between banking supervisors (2001), High-
level principles for the cross-border implementation of the New Accord (2003) and Home-host information-
sharing for effective Basel II implementation (2006). The Basel Committee’s Concordat and other documents 
related to cross-border supe rvision are accessible at http://www.bis.org/list/bcbs/tid_24/index.htm .   S/FIN/W/90 
 
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  2.2.  Basel III: the net stable funding ratio (October 2014) . The net stable funding ratio (NSFR) 
requires banks to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities. A sustainable funding structure is intended to reduce the likelihood that disruptions to a bank's regular source s of funding will erode its liquidity position in a 
way that would increase the risk of its failure and potentially lead to broader systemic stress. The 
NSFR limits overreliance on short-term wholesale funding, encourages better assessment of funding risk across all on- and off-balance sheet items, and promotes funding stability.  
Relevant trade-related aspect 
 
As explained in the standard, "the NSFR should be applied to all 
internationally active banks on a consolidated basis, but may be used for 
other banks and on any subset of entities of internationally active banks 
as well to ensure greater consistency and a level playing field between 
domestic and cross-border banks."  
 
2.3.  The G-SIB assessment methodology - score calculation (November 2014) . The methodology 
for assessing the systemic importance of banks consists of an indicator-based measurement 
approach. The G-SIB framework compares a bank's activity over 12 indicators, grouped into five 
categories related to systemic importance (size,  interconnectedness, substitutability, complexity 
and cross-jurisdictional activity. The resulting numerical score represents a bank's activity as a 
percentage of the sample total and is used to de termine the bank's overall higher loss absorbency 
(HLA) requirement. Higher scores result in higher  HLA requirements. As a consequence, banks that 
are larger, more interconnected, less substitutable, more cross-jurisdictional, and/or more complex will have greater HLA requirements and thus be better positioned to withstand financial 
distress.  
2.4.  Revisions to the securitisation framework (December 2014).  The revisions to the 
securitisation framework aim to address a number of shortcomings in the Basel II securitisation 
framework and to strengthen the capital standards for securitisation exposures held in the banking 
book. This framework, which will come into effect in January 2018, forms part of the BCBS's broader Basel III agenda. The most significant revisions with respect to the Basel II securitisation framework relate to changes in (i) the hierarchy of approaches (internal ratings-based approach, 
external ratings-based approach, and standardized approach); (ii) the risk drivers used in each 
approach; and (iii) the amount of regulatory capital banks must hold for exposures to securitisations. 
2.5.  Revised Pillar 3 disclosure requirements (January 2015) . The revisions to the disclosure 
requirements address shortcomings in Pillar 3 of the Basel framework, and will enable market 
participants to better compare banks' disclosures of risk-weighted assets. The revisions notably 
focus on improving the transparency of the inte rnal model-based approaches that banks use to 
calculate minimum regulatory capital requirements. The revised requirements will take effect from 
year-end 2016. The revised requirements supersed e the existing Pillar 3 disclosure requirements 
first issued as part of the Basel II framework in 2004 and the Basel 2.5 revisions and 
enhancements introduced in 2009.  
2.6.  Margin requirements for non-centrally cleared derivatives (March 2015). The framework was 
originally published in September 2013, after two public consultations. Relative to the 2013 
framework, the revisions delay the beginning of the phase-in period for collecting and posting 
initial margin on non-centrally cleared trades from 1 December 2015 to 1 September 2016. The full phase-in schedule has been adjusted to refl ect this nine-month delay. The revisions also 
institute a six-month phase-in of the requirement to exchange variation margin, beginning 1 
September 2016. 
  
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Relevant trade-related aspect 
 
Key principle 7 establishes that "regulatory regimes should interact so as 
to result in sufficiently consistent and non-duplicative regulatory margin 
requirements for non-centrally cleared derivatives across jurisdictions." 
The requirements further explain (para 7.1) that "[t]he margin 
requirements in a jurisdiction may be applied to legal entities established 
in that local jurisdiction, which would include locally established 
subsidiaries of foreign entities, in relation to the initial and variation 
margins that they collect. Home-country supervisors may permit a 
covered entity to comply with the margin requirements of a host-country 
margin regime with respect to its derivatives activities, provided that the 
home-country supervisor considers the host-country margin regime to be 
consistent with the margin requirements described in this framework. A 
branch is part of the same legal en tity as the headquarters; it may be 
subject to either the margin requirem ents of the jurisdiction where the 
headquarters is established or the requirements of the host country." It is 
further recommended that "home and host country supervisors closely 
cooperate to identify conflicts and inconsistencies between regimes with 
respect to cross-border application of margin requirements. It is further 
recommended that authorities coordinate their approaches via 
multilateral or bilateral channels to reduce such issues, to the extent 
possible." 
 
2.7.  Net Stable Funding Ratio disclosure standards (June 2015) . Disclosure requirements for the 
Net Stable Funding Ratio (NSFR) have been develo ped to improve the transparency of regulatory 
funding requirements, reinforce the Principles for sound liquidity risk management and 
supervision, strengthen market discipline, and reduce uncertainty in the markets as the NSFR 
standard is implemented. Similar to the Liquidit y Coverage Ratio disclosu re framework, and to 
promote the consistency and usability of disclosures related to the NSFR, internationally active 
banks in all Basel Committee member jurisdictions will be required to publish their NSFRs 
according to a common template. This NSFR disclosure template includes the major categories of sources and uses of stable funding. In parallel with the implementation of the NSFR standard, 
supervisors will give effect to these disclosure re quirements, and banks will be required to comply 
with them from the date of the first reporting period after 1 January 2018. 
Relevant trade-related aspect 
 
"Scope of application: The disclosure requirements set out in this 
document are applicable to all internationally active banks on a 
consolidated basis but may be used for other banks and on any subset of 
entities of internationally active banks to ensure greater consistency and 
a level playing field between domestic and cross-border banks." 
 
2.8.  Corporate governance principles for banks (July 2015) . While there is no single approach to 
good corporate governance, the Basel Committee's revised principles provide a framework within which banks and supervisors should operate to ac hieve robust and transparent risk management 
and decision-making and, in doing so, promote public confidence and uphold the safety and 
soundness of the banking system. The Committee's re vised set of principles supersedes guidance 
published by the Committee in 2010. The revise d guidance stresses the importance of risk 
governance as part of a bank's overall corporat e governance framework and promotes the value of 
strong boards and board committees together with effective control functions.  
2.9.  Supervisory Guidance on Dealing with Weak Banks (July 2015). This updates the 2002 
Supervisory guidance on dealing with weak banks. Part I of the guidance discusses the underlying 
supervisory preconditions for dealing with weak banks and techniques that will allow the 
supervisor to identify problems. These phases incl ude preparatory work on recovery and resolution S/FIN/W/90 
 
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  issues. Part II concerns the corrective measures available to turn around a weak bank and, for 
resolution authorities, tools for dea ling with failing or failed banks.  
Relevant trade-related aspect  
 
Section 8.3 of the Guidance discusses cross-border issues at length. 
There are four permutations of cross-border operations that are relevant 
in this context: a foreign bank with a subsidiary or branch in a host 
country; and a home country bank with a subsidiary or branch in a 
foreign country. The different permutations involve legal differences and 
create different supervisory perspectives. In all cases, however, 
coordinated supervisory responses are needed for an optimal outcome.  
 
Cross-border issues also arise when a domestic bank is controlled by a 
large foreign shareholder. The bank can become weakened if that 
shareholder suffers reputational damage. 
 
Additional complexities may arise in the case of a foreign subsidiary that 
is designated as a domestic systematically important bank (D-SIB), 
which may require the need for higher loss absorbency, which might 
affect the resolution plan for the banking group. 
 
3  INTERNATIONAL ASSOCIATION OF  INSURANCE SUPERVISORS (IAIS): 
3.1.  Guidance on liquidity management and planning (October 2014) . The IAIS released its Policy 
Measures for global systemically important insure rs (G-SIIs) on 18 July 2013. The purpose of this 
new document is to provide guidance to group- wide supervisors in the application of these 
requirements to G-SIIs. 
3.2.  Basic capital requirements for systemically important insurers (October 2014) . The 
development of the Basic Capital Requirements (B CR) is the first step of the IAIS' project to 
develop group-wide global capital standards.  
3.3.  Higher Loss Absorbency (HLA) requirements fo r Global Systemically Important Insurers (G-
SIIs) (October 2015) . HLA requirements are part of the July 2013 policy measures for G-SIIs. 
Their primary purpose is to help reduce the probab ility and impact on the financial system of the 
distress or failure of a G-SII. The development of the HLA is the second step of a long-term project to develop risk-based, group-wide global insurance capital standards. The first step was the 
development of BCR requirements in 2014. The th ird step is the development of a risk-based 
group-wide global Insurance Capital Standard (ICS), due to be adopted by the end of 2019. 
3.4.  Insurance Core Principles, Standards, Guidance and Assessment Methodology 
(November 2015) . The Insurance Core Principles (ICPs) prescribe the essential elements that must 
be present in the supervisory regime in order to promote a financially sound insurance sector and provide an adequate level of consumer protection . Standards are directly under the ICPs in the 
hierarchy of IAIS supervisory material. The ICPs were first issued on 1 October 2011. Individual 
core principles, with related standards and guidance, have been amended in subsequent years to 
reflect best practices, address changes to the insurance sector and supervisory requirements, align them with standards from other standard setting bodies, as well as to incorporate findings 
generated by the IAIS’ feedback loop between impl ementation activities and standard setting. This 
amendment updated ICP 4 (Licensing), ICP 5 (S uitability of Persons), ICP 7 (Corporate 
Governance), ICP 8 (Risk Management and Internal  Controls), ICP 23 (Group Wide Supervision) 
and ICP 25 (Supervisory Cooperation and Coordination). 
3.5.  Application Paper on the Regulation and Supe rvision of Captive Insurers (November 2015) . 
The Application Paper is specifically directed at the supervision and regulation of captive insurance companies.
5 The Application Paper follows the IAIS Issues Paper on the Regulation and 
                                               
5 The IAIS standard on enhanced disclosure define s a captive insurer as "an insurance or reinsurance 
entity created and owned by one or several industrial, commercial or financial entities, other than an insurance or reinsurance group entity, the purpose of which is to provide insurance or reinsurance cover for risks of the S/FIN/W/90 
 
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  Supervision of Captive Insurance Companies released in October 2006 and provides practical 
advice for supervisors in line with the current range of ICPs. 
4  INTERNATIONAL ORGANIZATION OF SECURITIES COMMISSIONS (IOSCO) 4.1.  Recovery of financial market infrastructures (October 2014) . All systemically important 
financial market infrastructures (FMIs) should have a comprehensive and effective recovery plan, 
as required by the CPMI-IOSCO Principles for financial market infrastructures (PFMI), because the disorderly failure of such an FMI could lead to severe systemic disruptions. This report is not 
intended to create additional standards for FMIs, but rather to provide supplementary guidance on, 
and a menu of tools for, observance of the PFMI. The report is also consistent with the FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions. 
4.2.  Risk Mitigation Standards for Non-centrally Cleared OTC Derivatives (January 2015) . This 
report presents the risk mitigation standards for non-centrally cleared over-the-counter (OTC) 
derivatives. IOSCO has developed these standards in consultation with the Basel Committee on Banking Supervision (BCBS) and the Committee on Payments and Market Infrastructures (CPMI).  
Relevant trade-related aspect 
 
Standard 9 deals with cross-border derivatives transactions. Risks of 
conflict and inconsistencies between different regimes may arise due to 
the global scope of the market for non-centrally cleared OTC derivatives. 
Key derivatives market participants are often engaged in derivatives 
activity through a variety of legal entities in different national 
jurisdictions and frequently deal with counterparties on a cross-border 
basis. Given the global nature of the market, the effectiveness of the risk 
mitigation requirements could be undermined if inconsistent 
requirements are adopted. Inconsistent or conflicting requirements also 
would add to the regulatory burden and costs of compliance for the 
industry. Authorities should cooperate and coordinate through bilateral or 
multilateral channels to reduce such issues to the extent possible.  
Against that background, standard 9 establishes that "[t]he different 
regulatory regimes should interact so as to minimise inconsistencies in 
risk mitigation requirements for non-centrally cleared OTC derivatives 
across jurisdictions."  
 
4.3.  Public quantitative disclosure standards for central counterparties (February 2015) . The 
CPSS-IOSCO Principles for financial market infrastructures  (PFMI), published in April 2012, state 
that financial market infrastructures (FMIs) should provide relevant information to participants, relevant authorities and the broader public. Quanti tative data are important components of the set 
of public disclosures that is expected of FMIs as part of satisfying the PFMI. This document sets out 
the public quantitative disclosure standards that central counterparties (CCPs) are expected to fulfil. These standards complement the CPSS-IOSCO Disclosure framework,  published in 
December 2012, which deals with primarily qualitative information.  
4.4.  Other standards enacted by IOSCO in the period under review are the following : Code of 
Conduct Fundamentals for Credit Rating Agencies (March 2015; Post-Trade Transparency in the Credit Default Swaps Market (August 2015) ; and the Standards for the Custody of Collective 
Investment Schemes' Assets (November 2015) . 
5  FINANCIAL STABILITY BOARD (FSB) 5.1.  Key Attributes of Effective Resolution Regimes for Financial Institutions (October 2014) . 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 
                                                                                                                                               
entity or entities to which it belongs, and only a small part, if any, of its risk exposure is related to providing 
insurance or reinsurance to other parties." S/FIN/W/90 
 
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  economic functions. They set out twelve essential features that should be part of the resolution 
regimes of all jurisdictions, and that relate to scope; resolution authority; resolution powers; set-off, netting, collateralization, segregation of client assets; safeguards; funding of firms in resolution; legal framework conditions for cross-border co-operation; crisis management groups 
(CMGs); institution-specific cross-border coop eration agreements; resolvability assessments; 
recovery and resolution planning; and access to information and information sharing. The Annexes to the Key Attributes provide more specific guidance to assist authorities in implementing the Key 
Attributes with respect to certain aspects of resolution regimes and to particular sectors. 
Relevant trade-related aspect 
 
The resolution regime should extend to branches of foreign firms. The 
Key Attributes further explain that the "resolution authority should have 
resolution powers over local branches of foreign firms and the capacity to 
use its powers either to support a resolution carried out by a foreign 
home authority (for example, by orde ring a transfer of property located 
in its jurisdiction to a bridge institution established by the foreign home 
authority) or, in exceptional cases, to take measures on its own initiative 
where the home jurisdiction is not taking action or acts in a manner that 
does not take sufficient account of the need to preserve the local 
jurisdiction’s financial stability. Where a resolution authority acting as 
host authority takes discretionary national action, it should give prior 
notification and consult the foreign home authority." 
 
Section 8 deals with cross-border issues, and provides further 
recommendations to home and host resolution authorities.  
 
5.2.  Principles for Cross-border Effectiveness of Resolution Actions (November 2015) . These 
Principles set out elements for statutory and contractual mechanisms that jurisdictions should 
consider including in their legal frameworks to give cross-border effect to resolution actions in accordance with the SB Key Attributes of Effective Resolution Regimes for Financial Institutions. This guidance has been developed with a focus on the resolution of banks. However, many of the 
legal issues and principles discussed may be relevant to other types of financial institutions as well 
as to financial market infrastructures.  
Relevant trade-related aspect  
 
The need to give cross-border effect to resolution actions may arise with 
respect to a firm undergoing resolution in its home jurisdiction that 
operates a branch or controls a subsidiary in a foreign jurisdiction; or a 
firm that holds assets, liabilities or contracts located or booked in, or 
subject to the law of, another jurisdiction in which the firm is not 
established.  
 
5.3.  Guidance on Cooperation and Information Sharing with Host Authorities of Jurisdictions 
where a G-SIFI has a Systemic Presence that are Not Represented on its CMG (November 2015) . 
The FSB Key Attributes of Effective Resolution Regimes for Financial Institutions require home and 
key host authorities of FSB-designated Global Systemically Important Financial Institutions (G-SIFIs) to maintain crisis management groups (CMGs) to prepare for and manage a cross-border 
financial crisis affecting the firm. The membership composition of CMGs requires a balance to be 
struck between efficiency and inclusiveness. The FSB Guidance seeks to ensure that host 
regulators who are not part of CMGs have access to relevant information about a firm even if the market they supervise is not considered systemic for the firm. This sharing of information is 
especially important in instances where the failure of an institution could be systemic for the 
non-CMG country. This guidance sets out a way for resolution authorities and host regulators to address these concerns and ensure that appropriate arrangements for ongoing communication, 
cooperation and information sharing with the relevant authorities in those jurisdictions are 
established and maintained. S/FIN/W/90 
 
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  5.4.  Total Loss-Absorbing Capacity (TLAC) Principles and Term Sheet (November 2015) . The Total 
Loss-absorbing Capacity (TLAC) Standard applies to firms that have been designated as global systemically important banks (G-SIBs) by the FSB. All G-SIB are required to meet a new requirement for Minimum External TLAC alongsid e minimum regulatory capital requirements set 
out in the Basel III framework. 
Relevant trade-related aspect 
 
The Principles deal with issues raised  by the resolution of cross-border 
groups. They establish in particular that "[h]ost authorities must have 
confidence that there is sufficient loss-absorbing and recapitalization 
capacity available to subsidiaries in their jurisdictions with legal certainty 
at the point of entry into resolution." Moreover, "[w]ithout such 
confidence, host authorities could demand extra resources to be ring-
fenced in their own jurisdictions either ex-ante or ex-post in a resolution. 
The adverse consequences of such actions, including global 
fragmentation of the financial system, and disorderly resolutions of failed 
cross-border firms, should be av oided. To implement an orderly 
resolution, there must be sufficient flexibility to use loss-absorbing 
capacity within a G-SIB where needed. This means that there will need to 
be a credible mechanism by which losses and recapitalization needs may 
be passed with legal certainty to the resolution entity or entities."  
 
5.5.  Regulatory framework for haircuts on non-centrally cleared securities financing transactions 
(November 2015) . This regulatory framework is intended to limit the build-up of excessive 
leverage outside the banking system, and to help  reduce the pro-cyclicality of that leverage. 
 
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