Citing ongoing implementation delays, the Financial Stability Board (FSB) is pushing back its deadlines for regulators to adopt reforms to address financial stability risks in securities financings.
The Basel, Switzerland-based global policy group is delaying the deadline for national regulators to adopt certain standards for securities financing transactions that are not centrally cleared.
The FSB says that financing deals, such as repos and securities lending transactions, which are critical to price discovery and secondary market liquidity for many securities, “can also be used to take on leverage as well as maturity and liquidity mismatched exposures, and therefore can pose risks to financial stability.”
The FSB developed measures to address those risks in an effort to boost financial sector resilience, including reforms to set new standards for securities financing transactions, and to boost transparency around these deals.
Now, it says, while regulators are making progress in adopting the recommendations, “implementation has seen significant delays in some jurisdictions,” particularly as certain reforms to global banking regulation have been delayed to 2022.
As a result, the FSB is now pushing back its implementation deadlines too — to January 2022 for transactions between banks and non-banks, and to January 2024 for non-bank to non-bank transactions.