At its meeting today, the Financial Stability Board approved the anticipated surcharges for global banks (see Client Report SYSTEMIC42) and criteria for deciding which banks will be subject to them. Both standards will be issued later this month as consultative documents, although the ability of commenters to change the minds of global regulators on either front is, at best, uncertain. Although some FSB members had expected the paper on systemic criteria to cover both banks and non-banks, the FSB instead confined itself to bank sanctions. Insurance issues will be addressed later this year by global regulators for that sector; the status of systemic criteria for investment firms remains unclear because global securities regulators are very much divided on this issue. The FSB also approved a consultative paper on cross-border resolution and made some progress on a new approach to curtailing shadow banking, although any action here is delayed until 2012. This report assesses FSB actions and next steps in the global arena. U.S. firms remain poised for the expected FRB release later this month implementing the far more expansive surcharges required of systemic firms under the Dodd-Frank Act (see FSM Report SYSTEMIC29).
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