MFA Submits Response to FSB Regarding Consultative Document on Cross-Border Recognition of Resolution Action

MFA submitted comments in response to the Financial Stability Board's ("FSB") consultative document titled "Cross-Border Recognition of Resolution Action" which was published on September 29, 2014.

MFA voiced support for the adoption of statutory recognition frameworks in FSB member jurisdictions as the only appropriate solution to cross-border recognition resolution actions. Additionally, MFA urged the FSB to ensure:

• that the statutory recognition frameworks are crafted carefully and fairly to include all parties and provide no favorable treatment for different types of parties; and
• that it is clear that only one jurisdiction has ultimate authority over the resolution of the failing institution and that affected market participants have certainty as to which jurisdiction has such authority.

MFA also objected to the FSB's proposed contractual approach, which would seek to use the ISDA Resolution Stay Protocol and prudential regulations adopted by FSB members, rather than statutory recognition frameworks, to recognize resolution actions on a cross-border basis. MFA expressed a number of concerns, both in policy and process, with the proposed contractual approach.

See: MFA Comment Letter on FSB Consultative Document.Related news: G-18 Banks Agree to Sign ISDA Resolution Stay Protocol (October 13, 2014).