IOSCO and FSB Publish Proposed Assessment Methodologies for Identifying Non-Bank Non-Insurer Global SIFIs

IOSCO and the Financial Stability Board ("FSB"), each of which is an international coalition of national financial regulators, published a consultative document which proposes a high-level framework and specific methodologies for identifying non-bank non-insurer ("NBNI") global systemically important financial institutions ("SIFIs").

According to the FSB and IOSCO release, SIFIs are institutions whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to economic activity and the wider financial system. At the Seoul G20 Summit in 2010, the FSB issued a recommended framework for reducing the risks posed by SIFIs, stating that the first step in implementing the framework requires the assessment of global SIFIs ("G-SIFIs").

The consultative document by FSB and IOSCO proposes specific methodologies for the identification of NBNI G-SIFIs; however, the release noted that the document does not designate any specific entities as systemically important or propose any policy measures that would apply to NBNI G-SIFIs. In a report published by FSB in September 2013 titled "Progress and Next Steps Towards Ending 'Too-Big-to-Fail,'" the FSB explained that policy measures will be developed once the methodologies are finalized.

Comments on the consultative document should be submitted to the Secretariat of the FSB by April 7, 2014.

See: FSB IOSCO Press Release; FSB IOSCO Consultative Document.Related news:FSB Provides Progress Update on SIFI Framework (with Lofchie Comment) (November 5, 2012).