Building on “key attributes” set by the FSB to ensure orderly recovery and resolution, global financial regulators are now turning to making these principles effective and operational standards that prevent systemic risk and taxpayer bail-out. Although still largely focused on global systemically-important banks (G-SIBs), the FSB here is also seeking to make them more easily applicable to non-bank global systemically-important financial institutions (G-SIFIs). The consultative paper outlines two ways to handle a G-SIB or, perhaps, a G-SIFI:  resolution through a single point of entry – i.e., a home-country led top-down resolution starting with the parent company – or use of multiple points of entry, where individual entities are separately resolved under applicable regimes and a parent company or other entities may be subject only to otherwise-applicable insolvency proceedings. The constructive paper details how each of these approaches can be made workable, but does not specify a preference that would guide regulators or markets, perhaps creating considerable uncertainty even if all of its other requirements are widely and consistently adopted. The choice between these resolution options also has considerable impact on the types of structures demanded of G-SIBs and G-SIFIs, as the first treats them as integrated firms in which resources can be quickly deployed in an effort to ensure rapid recapitalization, while the multiple-point-of-entry option instead views complex firms as conglomerates that would need to be taken apart, thus likely forcing ring-fencing and other structural change. The paper also seeks to define critical firms and/or services to ensure orderly markets in the wake of a G-SIFI’s failure, casting a wide net throughout an extensive array of activities and support services that could lead to extensive systemic regulation and/or restructuring of firms in designated businesses.

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